SEBI Regulations and Guidelines on ESG

Introduction

The Securities and Exchange Board of India (SEBI) has emerged as a frontrunner in embedding sustainability into corporate governance. By formulating a comprehensive and evolving framework on Environmental, Social, and Governance (ESG) disclosures, SEBI has aligned Indian markets with global sustainability standards while responding pragmatically to the challenges faced by businesses. Its regulatory roadmap anchored by the Business Responsibility and Sustainability Reporting (BRSR) framework mandates consistent, comparable, and transparent reporting, making ESG integral to corporate strategy rather than optional compliance.

The introduction of new disclosure metrics, value chain reporting, green credit tracking, and ESG debt instruments mark India’s accelerating drive toward sustainable growth, with implications not just for businesses but also for investors, regulators, and the climate agenda.

SEBI and the Evolving ESG Regulatory Landscape in India

The ESG journey in India has been decades in the making:

• 2009 – Ministry of Corporate Affairs introduced voluntary Business

Responsibility Reporting (BRR).

• 2012 – SEBI mandated BRR for the top 100 listed companies.
• 2019 – BRR scope expanded to the top 1000 listed entities.
• 2020 – An MCA committee recommended new global-standard framework, resulting in SEBI’s BRSR format.
• 2021 – BRSR notified, replacing BRR; effective from FY 2022–23 for the top 1000  companies.
• 2023 – SEBI introduced the BRSR Core, highlighting nine key sustainability metrics.
• 2024–2025 – Expansion into value chain disclosures, green credit reporting, and stricter assurance norms.
• June 2025 – SEBI introduced a regulatory framework for ESG debt securities, broadening sustainable finance beyond green bonds.

This evolution shows India’s steady transition from voluntary, fragmented reporting to a structured, phased, and globally comparable system.

Overview of SEBI’s ESG Framework

1. BRSR & BRSR Core

The “BRSR” requires the top 1000 listed companies to disclose information across environmental, social, and governance dimensions. Its Core version (BRSR Core) focuses on nine metrics such as:

• Greenhouse gas footprint
• Water and energy usage
• Waste and circularity practices
• Employee welfare, diversity, safety
• Governance practices and anti-corruption safeguards

Importantly, BRSR Core integrates India-specific KPIs like job creation in smaller towns, gender wage metrics, for global comparability.

Compliance Timeline:

• FY 2023–24: Top 150 companies
• FY 2024–25: Top 250 companies
• FY 2026–27: Top 500 companies (mandatory filing with annual reports)

2. Value Chain Disclosures

One of SEBI’s most significant enhancements is the requirement for companies to report ESG metrics of their value chain partners:

• Scope: Suppliers/customers contributing ≥2% individually, OR reporting collectively for 75% of purchases/sales by value.
• Timeline:
• Voluntary in FY 2025–26 (top 250 companies).
• Mandatory from FY 2026–27.
• Assessment/assurance by FY 2027–28.

This ensures that sustainability extends beyond the corporate entity to embrace suppliers and customers—addressing the fact that much of a company’s impact occurs within its supply chain.

3. Green Credit Disclosures

SEBI embedded the Green Credit Program (GCP) (launched by MoEFCC in 2023) into the BRSR Core under Principle 6:

• Listed entities must report green credits generated or procured by themselves and their top 10 value chain partners.
• Activities include renewable energy adoption, afforestation, recycling, water conservation, and pollution control.
• The objective is to increase visibility of the GCP and channel CSR funds towards measurable environmental outcomes.

This framework also provides investors visibility into how companies are actively contributing to India’s sustainability goals, beyond compliance.

4. Assurance & Governance Norms

To improve trust in ESG data:

• Companies must undergo either third-party assessment or assurance on BRSR Core from FY 2024–25.
• Value chain ESG data requires assurance from FY 2026–27.
• SEBI tightened rules for ESG rating providers (ERPs) to avoid conflicts of interest, mandate dual disclosures (issuer & subscribers), and ensure competence.

This step addresses concerns about greenwashing while making ESG data more reliable for investors.

ESG Bonds: Financing Sustainability

In June 2025, SEBI widened its sustainability framework to cover ESG debt securities (excluding green bonds, which already had regulations).

Bond Categories:

1. Social Bonds – finance projects in healthcare, housing, education, and employment.

2. Sustainability Bonds – combine environmental and social goals.

3. Sustainability-Linked Bonds (SLBs) – link financial terms (e.g., coupon rates) to the issuer’s ESG performance.

Key Features:

• Mandatory Disclosures: Project objectives, target populations, clear tracking mechanisms.
• Post-Issuance Transparency: Regular disclosure of fund utilization and impact metrics.
• Third-Party Validation: Independent reviewers required.
• Accountability Clauses: Deviation from ESG goals can trigger early redemption or corrective measures.

This framework builds credibility and aligns Indian ESG bonds with ICMA’s global principles while opening the door for deeper international ESG capital inflows.

Impacts and Strategic Implications

1. For Companies

• ESG is no longer optional—it is integrated into strategy, supply chain, and financing.
• Transition costs will be high, but companies that adapt early will enhance investor trust and strengthen market positioning.

2. For Investors

• Improved transparency and comparability reduce risks of greenwashing.
• Access to verified ESG information strengthens responsible investment strategies.

3. For India’s Climate & Economy

• Supports India’s commitments: Net Zero by 2070 and 50% renewable energy by 2030.
• Expands green financing avenues.
• Reinforces India’s global image as a future “green powerhouse.”

Challenges Ahead

• Many small suppliers lack resources for ESG reporting.
• Setting up reliable systems for value chain data collection will be complex.
• Third-party assurance costs may burden mid-size firms.
• Educating corporate boards and directors to prioritize ESG alongside financial reporting is critical.

The Parliamentary Standing Committee on Finance (March 2025) has already proposed strengthening ESG via:

• Mandatory ESG committees on boards.
• Amending the Companies Act, 2013 to hold directors legally responsible for ESG compliance, similar to financial accountability.

Format for ESG & Disclosure

The standard format for ESG reporting in India is the “BRSR” framework, mandated by SEBI. The BRSR is divided into three major sections:

1. Management and Process Disclosure

This section covers the governance structures, policies, and processes regarding ESG issues, how responsibilities are assigned, and the methods used to ensure ethical conduct and sustainability integration.

2. Principle-wise Performance Disclosure

Companies must report their compliance and actions taken under the nine principles of the National Guidelines on Responsible Business Conduct (NGRBC). These principles include ethical governance, safe and sustainable goods/services, employee welfare, stakeholder engagement, human rights, environmental stewardship, public policy advocacy, inclusive development, and transparency in customer relations.

3. General Disclosure

This includes basic company information such as products, turnover, employee demographics, business segments, and the reporting boundaries applied.

Key Features:

• Each section is further split into mandatory indicators and voluntary (leadership) indicators.
• Disclosure of both qualitative and quantitative ESG data is required, such as greenhouse gas emissions, energy use, water consumption, waste management, diversity statistics, and grievance redressals.
• The BRSR Core now specifies detailed Key Performance Indicators (KPIs) and includes requirements for supply/value chain reporting and reasonable assurance as per the latest 2023-2025 circulars.

Principle-wise Disclosures under BRSR

Principle 1: Ethics, Transparency, and Accountability

• Disclose policies and practices on ethical governance, including anti-corruption and anti-bribery measures.
• Information on whistle-blower mechanisms and complaint handling.
• Board and management oversight on ESG matters.
• Transparency in disclosures and communication with stakeholders.

Principle 2: Products Responsibility

• Report on measures to ensure the safety and quality of products and services.
• Information on product lifecycle impacts regarding environment and social factors.
• Customer health and safety, labeling transparency, and grievance redressal mechanisms.

Principle 3: Wellbeing of Employees

• Employee demographics, including workforce diversity metrics.
• Policies on health, safety, and wellness at the workplace.
• Training and skill development initiatives.
• Compliance with labour laws and efforts to promote employee satisfaction.

Principle 4: Stakeholder Engagement

• Description of the company’s approach to engaging stakeholders including communities, suppliers, customers, and employees.
• Details on grievance redressal mechanisms for stakeholders.
• Engagement on human rights and community development programs.

Principle 5: Human Rights

• Policies and processes for identifying and managing human rights risks.
• Measures to eliminate forced labour, child labour, and discrimination.
• Oversight of human rights in the value chain.
• Reporting on incidents and mitigation efforts.

Principle 6: Environment Responsibility

• Comprehensive disclosure on environmental impact including:
• Greenhouse gas emissions
• Energy and water consumption metrics.
• Waste generation, recycling efforts, and circularity initiatives.
• Biodiversity protection measures.
• Details of Green Credit generated or procured.

Principle 7: Public Policy Engagement

• Disclosure of company position and policies related to public policy advocacy.
• Transparency in lobbying and political contributions.
• Participation in industry or multi-stakeholder initiatives.

Principle 8: Inclusive Growth and Equitable Development

• Initiatives promoting social inclusion such as:
• Creating jobs in rural and underserved areas.
• Support for marginalized groups and gender equity.
• CSR spending details and impact.
• Inclusive business models and supplier diversity efforts.

Principle 9: Customer Interests

• Customer privacy and data protection policies.
• Fair marketing practices and transparent communications.
• Mechanisms to resolve customer complaints and maintain trust.

As per SEBI Circular SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122 dt. 12.07.2023, the top 1000 listed entities by market capitalisation are required to make disclosures as per the updated BRSR format (which include the disclosure and assurance requirements for BRSR Core, ESG disclosures for value chain, and assurance requirements

Conclusion

SEBI’s evolving ESG framework represents a landmark shift in India’s corporate governance. By merging disclosure reforms, supply chain accountability, green credit tracking, rating provider regulation, and ESG bonds into one unified roadmap, SEBI has placed India firmly on the path of sustainable finance.

This transformation is more than regulatory—it is systemic. What began in 2009 as voluntary reporting is now a powerful engine integrating business, capital markets, and climate objectives. As ESG becomes central to corporate India, these measures promise not only stronger investor confidence but also a pivotal role for India in the global climate economy.

In short, SEBI has moved ESG from compliance to competitiveness, and from disclosure to development—setting the stage for India to emerge as a global green powerhouse.