Climate plus approach adopted for Business Responsibility and Sustainability Reporting: Ajay Tyagi, Chairperson SEBI

Nov 10, 2021

• Disclosures not only climate-related but also based on quantitative social metrics

NEW DELHI, 10 November 2021: Mr Ajay Tyagi, Chairperson, SEBI today said that SEBI had introduced mandatory Business Responsibility Report (BRR) for top 100 listed companies in 2012, which was then extended to 500 companies in 2015 and then for top 1000 companies in 2019. SEBI had also introduced voluntary adoption of integrated reporting by top 500 companies.

Addressing a webinar on Driving Climate Action through Disclosure: BRSR as Bedrock for ESG Action in India, organized by FICCI in association with CDP, and WMB on the sidelines of COP26 in Glasgow, Mr Tyagi said that global developments, such as Paris Agreement on climate change, increased focus on sustainability, among others, have led to a review of the disclosure requirements under the BRR. "Accordingly, after extensive stakeholder consultation SEBI introduced the BRSR. The BRSR is more focused on having quantifiable metrics and is outcome oriented. The nine principles of BRSR echo the sustainable development goals (SDGs) and cover both environment and social aspects," he added.

India's new mandatory disclosure regime - Business Responsibility and Sustainability Reporting (BRSR), is a huge step towards standardized disclosures on ESG parameters and enable comparability across companies, sectors and over time.

"We believe that for a country like India, social factors are as relevant and important as climate-related factors. Therefore, we have consciously followed a Climate Plus approach while working on BRSR. The disclosures are not only related to climate-related metrics but also on quantitative social metrics," the SEBI Chairperson noted.

Further, speaking about sustainable investing, Mr Tyagi said that investors are realising the implication of sustainability related risks and have started treating these as material to their investment decisions. This is reflected in the recent increase in total assets and inflows in sustainable funds globally.

On regulatory response to the changing scenario, Mr Tyagi said that while the regulators may be agnostic to where investors invest, they have an important role to play to ensure ESG disclosures by funds and issuers and guard against green washing. "We are increasingly witnessing greater push to ESG disclosures from regulators across the globe. Till now regulators typically followed the voluntary approach towards ESG disclosures but now we are seeing a shift to mandatory ESG disclosures," he added.

At the panel discussion that followed, Mr Gyaneshwar Singh, Joint Secretary, Ministry of Corporate Affairs and Chairman, Committee on Business Responsibility and Sustainability Reporting, said that business and human rights are all connected. "All interventions may be summed up in responsible business conduct framework. While we are talking about financial reporting, the time has now come to talk about non-financial reporting; financial reporting is for the shareholders, but if we talk about stakeholders, we need to discuss non-financial reporting," he said. Disclosures should be part of business philosophy and help in making businesses future-ready, he added.

Mr Mahendra Singhi, MD and CEO, Dalmia Cements, said "The BRR and now the BRSR have been proactive and positive efforts for businesses. BRSR is a good foundation for ESG reporting, it will go a long way to help companies to introspect and then to communicate."

Mr Navneet Munot, MD & CEO, HDFC Asset Management Comp Ltd said that globally there has been an increase in awareness and activism amongst stakeholders in asking for business accountability for social and environmental impacts and issues such as climate change and environmental degradation. "India has been one of the early adopters of sustainability reporting for listed entities," he said.

Mr Donald Chan, MD, CDP Asia Pacific said "India has been a pioneer in introducing mandatory ESG disclosures. Disclosure framework allows comparison with peers in a sector and globally. For investors, disclosures provide useful information on forward-looking elements, such as what targets and scenarios a corporate has set out."

Mr Shankar Venkateswaran, Executive Director, CDP India, said, "We all know that COP26 has a particular significance to this decade. This decade is going to define our future - of humanity and of the planet." On BRSR, he added that it will enhance transparency, level playing field, and help in attracting sustainable finance. BRSR is a business imperative.