ISS Discloses New Trends in ESG Practices and Transparency in India

ISS ESG recently published a research paper indicating that India has been strengthening its efforts around environmental, social, and governance (ESG). Additionally, larger corporations are expected to disclose on ESG performances in next fiscal year as the policymakers and investors put more emphasis in this area. 

Disclosures for ESG will be mandatory from FY 2022-23 required by the Securities and Exchange Board of India. SEBI published the Business Responsibility and Sustainability Report (BRSR) in 2021, which proposes development of sector-specific sustainability metrics, particularly those relevant to the Indian context, as well as an implementation framework. The report will require the top 1,000 listed companies to disclose data regarding nine principles covering both environmental and social factors including climate action, responsible consumption and production, gender equality, and working conditions. 

Further, institutional investors have been taking great interests in responsible investment practices. In recent years, Indian financial institutions have started becoming signatories to globally recognized platforms such as the United Nations Principles for Responsible Investment (PRI), the Task Force on Climate-related Financial Disclosures (TCFD) for Banks and United Nations Principles for Responsible Banking (PRB) as Investors in India are welcoming progress made on the UN-backed Sustainable Development Goals, particularly in the areas of energy, water, and sanitation.

Outlook: While India comes relatively late to the responsible investment, there are very encouraging signs such as the Business Responsibility and Sustainability Report. The new frameworks establish a strong foundation for Indian companies to practice and deliver good results.