Sustainability Reporting is Now Business as Usual for Indian Companies

It's encouraging to note that 51 percent of India's top 100 listed companies by market capitalisation voluntarily disclosed their Scope 3 data for FY23, as revealed in the PwC India report titled, "Navigating India's Transition to Sustainability Reporting." This significant step forward in ESG reporting underscores the growing commitment of Indian businesses to sustainability, particularly as Scope 3 emissions play a pivotal role in understanding an entity's net zero journey.  

Scope 3 covers 15 different categories in total. Upstream emissions include those produced by external parties that source, make, and transport the raw materials and components businesses use. Among the other upstream categories are travel and commuting in the context of business operations and the emissions from the waste they generate. On the downstream side, emissions from the logistics, use, and disposal of the company's products are included. Downstream emissions also cover those from activities like investing and franchising. 

A critical regulatory development for mainstreaming ESG in India is the introduction of the BRSR, which SEBI introduced in May 2021 as a replacement for the Business Responsibility Report (BRR). The BRSR framework has taken references from many global reporting frameworks. The report analyses the publicly accessible BRSR reports of the top 100 companies (Nifty 50 companies and NEXT 50 listed companies) and their response to the regulatory requirement of mandatory reporting under the BRSR for the financial year ended 31 March 2023 (FY23). 

Sambitosh Mohapatra, Partner & Leader, ESG, PwC India, said, "With the BRSR becoming a mandatory report for businesses, ESG considerations have become key strategic priorities in boardroom discussions. This is a testimony of the enhanced awareness of the importance of sustainability and responsible business practices." 

Sumit Seth, a Chartered Accountant, said, "The introduction of the BRSR marks a pivotal shift towards a transparent, more inclusive, and globally harmonised reporting framework in India. The framework empowers investors and other stakeholders to make informed decisions about the company's sustainability performance." 

ESG reporting through the BRSR has ushered in greater transparency and a holistic view of a business's environmental and societal impact. Thus, it enables investors and other stakeholders to form key decisions through an ESG lens, make comparisons across companies and sectors, and track progress over time. 

Key highlights:

• 51 out of 100 companies analysed disclosed their Scope 3 data for FY23
• 44 percent of the top 100 listed companies conducted the life-cycle assessment of their products or services
• 89 percent of the companies disclosed their information on leadership indicators
• 34 percent of the companies have reduced their Scope 1 emissions, and 29 percent have reduced their Scope 2 emissions
• 49 percent of companies have increased their energy consumption from renewable sources
• 31 percent of companies have disclosed their net-zero targets 

For modern enterprises, reducing GHG emissions is not only an environmental necessity but also an economic and social imperative. It paves the way for a sustainable and resilient future, while also offering financial benefits such as energy efficiency and reduced healthcare costs,other than creating jobs in the clean energy space.  

The analysis of the top 100 listed companies revealed a genuine effort to reduce their carbon footprint. Notably, 34 of the 100 companies demonstrated a reduction in their Scope 1 emissions, and 29 companies managed to reduce their Scope 2 emissions.  

Key initiatives that led to these reductions include the adoption of energy-efficient technologies, the shift to renewable energy sources, and the purchase of carbon offsets. 

The way in which the ESG landscape is evolving in India and how businesses are responding to the developments demonstrates the increasing focus on sustainability. This shift in focus is also underpinned by the rapid development and enhancement of regulations in this field. As a result, it is vital for companies to thoroughly assess their existing ESG guidelines, processes, control, and data management mechanisms and continue to upgrade them in a timely manner to ensure the quality and consistency of ESG performance reporting. 

As India sets its sights on achieving its net zero vision by 2070, the business sector is recognized as a crucial enabler in this endeavor. The government and regulators have introduced new regulations related to ESG for businesses, further highlighting the importance of sustainability in the corporate landscape.