Sustainability Landscape -Large corporates

The Indian corporate landscape is undergoing a significant transformation towards sustainability, driven by evolving regulations and increasing stakeholder demands.

Mandatory BRSR Reporting: In India, the Securities and Exchange Board of India (SEBI) has mandated Business Responsibility and Sustainability Reporting (BRSR) for the top 1000 listed companies by market capitalization. With nearly 1150 BRSR reports currently available on the National Stock Exchange (NSE) website, this regulation has significantly increased transparency and accountability in corporate sustainability practices.

Adoption of International and Regional Standards: Indian corporates are increasingly aligning their reporting practices with international sustainability reporting frameworks such as the Global Reporting Initiative (GRI), the International Sustainability Standards Board's (ISSB) S1 and S2 standards, and the Sustainability Accounting Standards Board (SASB). Additionally, they are also adhering to regional regulations like the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) in Europe, and the Environmental Protection Agency (EPA) and Securities and Exchange Commission (SEC) guidelines in the United States.

Financial Sector's Role in Climate Reporting: The Reserve Bank of India (RBI) is playing a crucial role in driving climate-related disclosures by setting the stage for mandatory reporting on climate-related challenges for financial institutions. This initiative is expected to not only enhance transparency in the financial sector but also influence the sustainability practices of companies that receive financing from these institutions.

Private Finance and Sustainable Projects: Private financiers are increasingly demanding the adoption of sustainability practices in projects they fund. This trend is pushing companies to integrate sustainability considerations into their project design and implementation processes.

Green Labeling of Financial Portfolios: Banks in India have begun labeling their portfolios as "green" and "non-green," reflecting the growing emphasis on sustainable finance. This practice helps investors identify and support projects and businesses that align with environmental and social goals.

Rise of Thematic Bonds: The Indian market has witnessed a surge in the issuance of green bonds, blue bonds (focused on ocean conservation), and social bonds (addressing social issues). These thematic bonds provide opportunities for investors to contribute to specific sustainability objectives while earning financial returns.

CBAM and EPR Regulations: Indian exporters are now subject to the Carbon Border Adjustment Mechanism (CBAM) regulation in Europe, which imposes a carbon price on imported goods. Additionally, large corporates are facing Extended Producer Responsibility (EPR) regulations, holding them accountable for the environmental impact of their products throughout their lifecycle.

Scope 3 Emissions and Supply Chain Compliance: The requirement to report Scope 3 carbon emissions (indirect emissions from the value chain) is compelling companies to scrutinize the sustainability practices of their suppliers. This is leading to the adoption of sustainable procurement policies and greater collaboration with supply chain partners to reduce emissions.

The Indian corporate landscape is becoming increasingly complex as businesses navigate a growing array of sustainability regulations and stakeholder expectations. Companies that proactively embrace sustainability and integrate it into their core business strategies are likely to thrive in this evolving landscape