ESG relief from SEBI to help companies and value chains streamline their readiness

SEBI’s directive to defer ESG disclosures for value chains and make them flexible will give companies time to streamline their preparedness at the same time allowing a window to encourage their value chain partners to embrace ESG, experts said.

SEBI said companies can now opt for either ‘Assurance’ or ‘Assessment’ in terms of Business Responsibility and Sustainability Reporting (BRSR), key disclosures and ESG parameters of the value chain. The evaluation will be guided by criteria to be developed by the Industry Standards Forum (ISF) in consultation with SEBI.

According to experts, these changes are a major step towards achieving a balance between ease of doing business and sustainability reporting, giving companies much-needed flexibility while enhancing transparency. The “comply or explain” approach has been replaced by a voluntary requirement.

“The introduction of the rating lowers the threshold for data accuracy liability on listed companies. As India’s ESG disclosure regime is still nascent, the threshold will encourage more voluntary disclosure from listed entities.” It will enhance transparency in reporting and availability of data to allow for more voluntary disclosure from listed entities. Future policies on ESG reporting and standards from an emerging markets perspective,” Siddharth S Kumar, Senior Associate, BTG Advaya.

In terms of value chain ESG disclosures, the first report now starts from the 2025-2026 financial year rather than the current financial year and confirmation or assessment will follow in the 2026-2027 financial year. The “comply or explain” approach has been replaced by a voluntary requirement.

SEBI’s phased approach to ESG reporting strikes the right balance by encouraging immediate action while giving companies the time they need to adapt, said Smitha Shetty, Regional Director, Asia Pacific, Achilles Information Ltd. Achilles is an environmental, social, governance (ESG) audit and due diligence firm.

“The postponement also calls on companies to start their data collection processes immediately for effective ESG reporting, ensuring they have the right baselines when the time comes. For MSMEs, it represents a valuable opportunity to kick-start sustainability practices and enhance capacity,” Shetty said. Competitiveness in the market and positioning them as responsible partners in the value chain.

Kumar explains that turning value chain disclosures into a voluntary practice will ease the compliance burden on listed companies. BTD Advaya is a dispute and transactional law firm.

“Furthermore, reducing the scope of value chain entities will encourage listed companies to voluntarily comply with disclosure requirements, as they can identify and focus on key suppliers and distributors,” he adds. “Such measures by listed entities could open up access to data on micro and small enterprises,” he adds. and medium enterprises to prepare environmental, social and governance reports without imposing a regulatory burden on MSMEs.”

With the availability of value chain information still a challenge across the world, Dipankar Ghosh, Partner and Leader, Sustainability, Environment and Governance, BDO India, says this SEBI initiative gives companies the time needed to streamline their preparedness while allowing a window to encourage their value chain partners to Embracing ESG in the right spirit, beyond mere compliance.

BDO India is a global professional services organization providing tax, accounting, assurance and advisory services.