ESG Compliance In India: New Reporting Mandates

Introduction

It is now a mandate in India for listed companies to measure, manage, and report ESG compliance, which has evolved from being a voluntary practice of managing ESG to now having a legally obligatory structured system.

In 2025, the Securities and Exchange Board of India (SEBI) elevated ESG mandates by introducing the BRSR Core under the SEBI BRSR 2025 framework. ESG compliance refers to the practice of companies disclosing how they impact the environment, society, and governance in a transparent and accountable way, going beyond just financial performance. With India's stricter reporting norms, businesses are now required to share standardised and verifiable data on aspects like carbon emissions, workplace diversity, ethical practices, and boardroom accountability. This shift not only enhances data accuracy and builds investor trust but also aligns Indian companies with global sustainability standards, making them more competitive and attractive to international stakeholders.

What is ESG COMPLIANCE?

As ESG has evolved into a core aspect of corporate responsibility, it serves as a way for companies to openly show their accountability and responsibility. It shows how businesses impact natural resources through factors like carbon emissions, energy efficiency, and waste management, while also reflecting their role in addressing climate change. Beyond the environment, ESG also examines how companies prioritise the welfare of their employees, promote inclusivity, uphold human rights, and actively contribute to building a healthier and more equitable society, and inclusive work environment.

The growing investor demand for ethical and sustainable business practices has also led to the rise of ESG-linked investments, where asset managers and institutional investors assess companies not only on financial returns but also on sustainability performance and governance integrity.
Environmental, social, and governance (ESG) factors are becoming crucial to investor decision-making and sustainable business practices in today's corporate environment. Businesses that incorporate ESG concepts into their operations exhibit risk minimisation, ethical leadership, and long-term resilience, all of which enhance their overall sustainability and competitive edge.

To match company aims with global sustainability objectives like the Sustainable Development Goals (SDGs) of the UN, ESG-driven initiatives assist in reducing their environmental impact, enhancing social responsibility, and ensuring strong governance frameworks.

Sustainability Compliance India: Key Environmental, Social, and Governance Metrics

Under the BRSR( the Business Responsibility and Sustainability Reporting) guidelines, companies must provide comprehensive disclosures across three core ESG categories, each outlined with specific reporting standards and evolving verification requirements.

Environmental Metrics

Companies are required to detail their environmental impact and sustainability initiatives, including:

• Carbon Footprint: Disclosure of greenhouse gas emissions, with intensity-based calculations and recognised emission factor sources.
• Energy Efficiency: Reporting on renewable energy adoption, total energy consumption, and power purchasing sources, with explicit classification of renewable and non-renewable energy.
• Waste Management: Information about waste reduction, recycling strategies, hazardous waste disposal, and circular economy activities, along with spend-based estimations when direct data is not available.
• Water Conservation: Total Ground water usage, wastewater management, and conservation efforts; use Central Water Authority guidelines for estimates when needed.
• Biodiversity Protection: Assessment of the company's impact on local ecosystems and proactive mitigation measures.

Social Metrics

The social disclosures focus on responsibility to people and society, requiring companies to report:

• Diversity and Inclusion: Workforce composition, gender diversity, representation of marginalised and protected groups, and reporting on complaints under POSH (Protection of Women from Sexual Harassment).
• Labour Rights: Affirming policies on fair wages, prevention of child/forced labour, and maintenance of safe workplaces.
• Employee Welfare: Health and accident insurance, maternity/paternity benefits, child care facilities, mental health initiatives, and cost details based on audited financials.
• CSR Initiatives: Details of activities undertaken as corporate social responsibility under statutory obligations (e.g., Companies Act, 2013).
• Community Engagement: Contributions to local communities, MSME support, inclusive development, and alignment with just transition goals.

Governance Metrics

Governance disclosures address ethical leadership, compliance, and data protection, including:

• Board Independence: Composition, roles of independent directors, and leadership diversity.
• Risk Management: Identification, assessment, and mitigation of ESG-related risks and enterprise-wide oversight.
• Ethics & Anti-Corruption Policies: Company code of conduct, anti-bribery protocols, whistleblower mechanisms.
• Data Security & Privacy: Reporting on cybersecurity policies, incidents relative to CERT-In reporting directives, and data protection measures, including compliance in foreign jurisdictions as required.

SEBI ESG Reporting 2025: The BRSR Core

SEBI's ESG reporting mandates for 2025 represent a major regulatory leap, focused specifically on refining, expanding, and enforcing sustainability disclosures, enhancing the corporate world of India. While BRSR Core, requires comprehensive, standardised ESG data from companies, starting with the top 1,000 listed companies.

The 2025 mandates are an intensified focus on value chain transparency. Companies are now required to report ESG information on their major suppliers and customers, specifically those accounting for 2% or more of total purchases or sales, or those covering 75% of aggregate purchases and sales value. This expanded scope ensures that disclosures don't just reflect on a company's direct operations, but also on the broader ecosystem within which it operates.

SEBI has introduced a phased approach, acknowledging the practical changes. For FY 2025-26, value chain ESG disclosures are voluntary for the top 250 companies, shifting to mandatory assessment or assurance by third-party experts in FY 2026-27. To enhance the transition, businesses can exclude prior-year data in their first round of disclosures and focus solely on significant partners.

The BRSR Core has been redesigned for clarity, encompassing nine key metrics that cover carbon and energy footprints, circular economy efforts, water conservation, diversity and social initiatives, and board governance, a new "green credit" leadership indicator now incentivises and publicly recognises companies generating or procuring green credits along with their major value chain partners, underscoring SEBI's push for measurable climate impact.

The regulatory intention behind these mandates is a clear move toward operational accountability, greater investor communication, and enhanced public scrutiny. ESG disclosures are no longer just a matter of corporate pride; they are statutory legal obligations, with potential regulatory action and market consequences for non-compliance. Publicly available, standardised disclosures allow investors to assess corporate risks and sustainability credentials with confidence. At the same time, companies are being encouraged to establish internal ESG frameworks and data management systems to meet evolving requirements.

ESG Legal Obligations India: Phased Timelines & Enforcement

The key deadlines for SEBI's 2025 ESG reporting mandates under the Business Responsibility and Sustainability Report (BRSR) Core are structured to phase in compliance gradually, balancing thorough disclosure with practical implementation timelines. The mandate requires India's top 1,000 listed companies to file ESG reports with increasing scope and assurance over the next few years:

• FY 2023-24: Voluntary BRSR Core disclosures for the top 150 listed companies by market capitalisation.
• FY 2024-25: Voluntary enhanced reporting, including value chain disclosures for the top 250 companies, focusing on upstream and downstream partners accounting for at least 2% of total procurement or sales.
• FY 2025-26: Mandatory ESG reporting for the top 250 companies, including value chain disclosures, but companies are not required to provide the prior year's data initially to ease transition.
• FY 2026-27: Mandatory submission of ESG disclosures with third-party assessment or assurance begins, including value chain partner data. The scope of reporting widens gradually to include the top 500 companies.
• Beyond FY 2026-27: Further expansion to include more companies and enhanced regulatory scrutiny, with the goal of ESG reporting becoming a standard and integral part of corporate governance and compliance in India.

SEBI has also postponed the mandatory requirement for value chain ESG disclosures by one year to FY 2025-26, allowing companies and their partners additional time to prepare. Until then, value chain disclosures remain voluntary, providing firms a grace period to build systems and processes for comprehensive sustainability reporting.

In sum, the transition plan reflects SEBI's intent to foster robust ESG compliance in India by gradually increasing reporting requirements and third-party assurance while considering industry readiness and implementation challenges.

Conclusion

SEBI's 2025 ESG reporting mandates mark a pivotal moment in the evolution of corporate governance and sustainability in India. By making ESG disclosures a mandatory, standardised, and enforceable requirement for the country's largest listed companies, SEBI has moved beyond voluntary guidelines to embed accountability, transparency, and rigour into the heart of business operations. These mandates not only raise the bar for environmental and social responsibility but also promote governance practices that align with global standards. The focus on value chain disclosures and third-party assurance further strengthens the credibility of corporate sustainability reporting. As these regulations take full effect, they will shape investor confidence, market efficiency, and India's broader commitment to sustainable development, positioning ESG compliance as a critical strategic lever for long-term corporate resilience and growth.

Footnotes

1 Kharola, D. M., Goyal, M. S., & Saxena, D. S. (2025). Mandatory ESG Reporting in India: Legal Obligations and Management Strategies. Journal of Marketing & Social Research, 2(2), 167-177. Available at: https://jmsr-online.com/article/mandatory-esg-reporting-in-india-legal-obligations-and-management-strategies-63/

2 Rebello, A. (2025). BRSR Reporting in India: Full Form, Applicability, Format, Guidelines, Benefits. ClearTax. Available at: https://cleartax.in/s/brsr-reporting

3 Securities and Exchange Board of India (SEBI). (2021). Business Responsibility and Sustainability Reporting by Listed Entities – Annexure I. Circular issued May 2021. Available at: https://www.sebi.gov.in/sebi_data/commondocs/may-2021/Business%20responsibility%20and%20sustainability%20reporting%20by%20listed%20entitiesAnnexure1_p.PDF

4 RSR Reporting: Applicability and Benefits. ClearTax. Available at: https://cleartax.in/s/brsr-reporting

5 BRSR Framework – Latest Amendments & Updates (2025). NeoImpact Blog. Available at: https://neoimpact.com/blog/brsr-amendments-2025/

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