INTRODUCTION
Traditionally, the main focus of corporate governance has been shareholder value; in the current era, that principle is undergoing a seismic shift. Globally is being recognized that the accountability of businesses is not limited just to shareholders, it includes the whole ecosystem of stakeholders. In the Indian landscape, this transition has taken place in a legal and regulatory framework that supports Environmental, Social, and Governance (ESG) considerations. The ESG framework in India is monitored and institutionalized by SEBI, the capital market regulator of India.[1]
The Business Responsibility and Sustainability Report (BRSR) was introduced as a voluntary framework in 2021 and was made mandatory for 1000 listed entities by FY 2022-23.[2] This was a significant step in the governance infrastructure, but concerns began to rise regarding the lack of standardization and risks, such as “greenwashing”. To strengthen this and fill the gaps, SEBI introduced the BRSR Core in 2023, meant to create legal accountability in ESG frameworks by creating an assurance-backed reporting mechanism.[3]
This blog seeks to examine the corporate implications and effects of BRSR Core, analyzing if this framework marks a step towards substantive responsible business conduct, looking at BRSR Core not merely as a compliance obligation, but rather as a transformative governance mechanism in the emerging ESG regime.
UNDERSTANDING BRSR CORE
The BRSR Core introduced by SEBI marks a significant moment in the ESG regulations. Unlike the BRSR framework introduced by the SEBI in 2021, the BRSR Core focuses on Key Performance Indicators(KPIs). These indicators ensure that the regulations are more sector-focused, quantifiable, and capable of third-party assurances. It was designed to standardize the ESG mechanism and make it more trustworthy and actionable by extracting a mandatory subset of ESG indicators and ensuring its implementation in a more rigorous manner than the full BRSR format. These indicators cover various important areas, including:
- Employee welfare (gender diversity, occupational health and safety)
- Environmental impact (GHG emissions, energy and water consumption)
- Business ethics (anti-corruption disclosures, grievance redressal timelines)
- Value chain due diligence (supplier assessments, human rights risk assessments)
The BRSR Core distinguishes itself by ensuring mandatory Key Performance Indicators (KPIs) across all ESG dimensions. The SEBI 2023 guidelines ensure the reduction of acts like “greenwashing” by establishing verifiable and materially significant ESG reporting, beginning with the top 150 companies and covering up to 1000 listed entities.[4]
LEGAL BACKING AND REGULATORY MANDATE
The core authority that provides legal backing to BRSR Core is the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which provides the regulator with powers to list the disclosure requirements by listed entities to ensure market integrity and satisfy the interests of investors.[5] Under this framework:
- Ranking on market capitalization top 150 listed entities are to ensure reasonable assurance of their BRSR Core disclosures starting from FY 2023-24.
- The disclosures are mandated for top-level to downstream, covering the entire value chain partners representing 75% of the purchase and sales of the total value.[6]
This move to cover 75% of the value chain creates a wide regulatory coverage and imposes ESG regulations even on smaller entities that have a significant role in the business operations, hence have to follow the regulations if they want to be a part of the company’s ecosystem.
ASSURANCE AND STANDARDISATION
SEBI is collaborating with the National Accreditation Board for Certifying Bodies (NABCB) and the Quality Council of India (QCI) to institutionalize audit practices and develop a formal assurance mandate.[7] This is being ensured to enhance credibility, progressing with “Limited assurance” for 150 listed entities in 2023-24, it is planned to mandate “reasonable assurance” for more companies. These assurances must be provided by independent third-party entities such as registered ESG rating providers, statutory editors, and sustainability consultants.[8] This shift to externally validated, quantifiable disclosures eradicates the prior existing self-declared ESG reports, which were considered to be mere reputation-based, but the legal and material nature of these disclosures is being highlighted with regulatory changes.
SYMBOLISM TO SUBSTANCE: LEGAL AND CORPORATE GOVERNANCE IMPLICATIONS
The emergence of the BRSR Core has marked a shift from symbolic ESG compliance to substantive corporate accountability. Previously, companies formed a vague social responsibility umbrella and considered ESG compliance as just a tick-box exercise. With the rise of third-party assurances and clearer legal implications, these compliances fall in the realm of corporate governance and fiduciary duties. Under the Companies Act, 2013, the directors have a duty under section 166 to act in the best interest of their employees, shareholders, and the community.[9] These are fiduciary duties, and material ESG risks fall under this duty, exposing the directors to legal scrutiny in case of non-compliance. Furthermore, Inaccuracies in ESG disclosures could trigger liabilities under SEBI (LODR) Regulation 4(2)(f), requiring the disclosure of accurate and timely information to stakeholders, making corporate accountability and transparency a significant factor in ESG compliance.[10] ESG disclosures have gone a long way from being aspirational to being a legal expectation backed by regulations.
Suppression of ESG disclosures may lead to lawsuits by investors, as it is now considered a significant factor in investor decision-making, which qualifies it under SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003,[11] As ESG reports affect market valuations and make corporations vulnerable to investor fraud claims.
GLOBAL ESG NORMS VS. INDIA’S BRSR CORE
In the global platform, ESG norms are becoming stringent in terms of adherence and disclosures. The European Union’s Corporate Sustainability and Reporting Directive (CSDR) covers over 50,000 companies with mandatory reporting of double materiality assessments since 2024. These directives require external assurance and strict adherence to the European Sustainability Reporting Standards
ESRS).[12] The USA, in contrast, has focused on large registrants, regulated by United States Securities and Exchange Commission (SEC) mandates climate climate-related disclosures on financial materiality and greenhouse gas emissions as the main focus.[13]
The BRSR Core in relation to this adopts a “middle path” as India has diverse scenarios; it balances perspective metrics with phased implementation. Though the regulations by CSRD and SEC are exhaustive, the BRSR Core reaches beyond the scope of these regulations by implementing supply chain value disclosures and third-party assurance. Moreover, it also makes it easier for Indian companies to harmonize with international norms and maintain investor confidence as it reflects elements of international standards such as the Task Force on Climate-related Financial Disclosures (TCFD), the Global Reporting Initiative (GRI), and the International Sustainability Standards Board (ISSB), which ensures seamless compliance across jurisdictions.
CONCLUSION
SEBI’s BRSR Core has elevated ESG from just a peripheral concern to a part of the core governance infrastructure of companies, holding stringent fiduciary and legal consequences for the top management. From just a voluntary narrative to quantitative metrics-based disclosures, ESG has come a long way due to BRSR. However, the full implementation and development of this mechanism requires corporate cultural changes that recognize sustainable initiatives as strategic needs of the corporation.
Continuous adherence to international norms and evolution in ESG jurisprudence is essential in ensuring that BRSR Core does not become another box-ticking exercise for companies, as it leads the corporate world with responsible capitalism. If supported by proper institutional infrastructure, this regulation can be revolutionary, placing India as a global benchmark, leading the way towards business integrity and resilience.
Author(s) Name: Rajat Patel (KIIT School of Law)
References:
[1]IBM Envizi, ‘The Indian Business Responsibility and Sustainability Report (BRSR) explained’ (IBM, 6 July 2023) https://www.ibm.com/think/topics/brsr accessed 25 June 2025
[2]SEBI, ‘ Business responsibility and sustainability reporting by listed entities’ (Circular No. SEBI/HO/CFD/CMD-2/P/CIR/2021/562, 10 May 2021) https://www.sebi.gov.in/legal/circulars/may-2021/business-responsibility-and-sustainability-reporting-by-listed-entities_50096.html accessed 25 June 2025
[3]SEBI, ‘BRSR Core Framework for assurance and ESG disclosures for value chain’ (Circular No. SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122 July 12 2023) https://www.sebi.gov.in/legal/circulars/jul-2023/brsr-core-framework-for-assurance-and-esg-disclosures-for-value-chain_73854.html accessed 25 June 2025
[4]KR Srivats, ‘Sustainability reporting: SEBI fixes schedule for mandatory reasonable assurance’, The Hindu BusinessLine (13 July 2023) https://www.thehindubusinessline.com/economy/sustainability-reporting-sebi-fixes-schedule-for-mandatory-reasonable-assurance/article67074816.ece accessed 25 June 2025
[5] SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, reg 4(2)(f) and reg 34(2)(f)
[6]SEBI (n 3)
[7]NABCB, ‘NABCB recommends SEBI to prescribe Accredited Assessments for ESG disclosures’, NABCB News (15 March 2025) 18 https://nabcb.qci.org.in/wp-content/uploads/2025/05/NABCB-Newsletter-Jan-to-Mar-2025.pdf accessed 26 June 2025
[8]SEBI (n 3) para 5
[9]Companies Act 2013, s 166(2)
[10]SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, reg 4(2)(f)
[11]SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003, reg 3 and reg 4(1)
[12]European Commission, ‘Corporate Sustainability Reporting’ https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en accessed 26 June 2025
[13]US Securities and Exchange Commission, ‘Proposed Rule: The Enhancement and Standardisation of Climate Related Disclosures for Investors’ (2022) https://www.sec.gov/newsroom/press-releases/2022-46 accessed 26 June 2025
