SEBI’s New Measures on ESG Disclosures and Green Credits to Enhance Ease of Doing Business

Introduction

The Securities and Exchange Board of India (SEBI) has made important changes to its regulatory framework to improve sustainability reporting and corporate practices transparency. SEBI issues Circular No. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2025/42 on March 28, 2025 to decrease compliance burdens for listed entities while improving ESG disclosure credibility. ^[1]The circular focuses on three key areas: the introduction of voluntary green credit disclosures, flexibility in assessment/assurance processes for sustainability reports, and deferred timelines for ESG disclosures in value chains. The changes conform to worldwide sustainability standards and focus on simplifying business operations for Indian corporate entities.

Explanation (Key Points)

1. Green Credit Disclosures
   • A new eighth leadership indicator under Principle 6 of the Business Responsibility and Sustainability Report (BRSR) requires listed entities to disclose green credits generated or procured:
     • By the entity itself.
     • By its top ten value chain partners (by purchase/sales value).
   • Applicability: Mandatory for BRSR disclosures from FY 2024–25 onward.
   • Purpose: Encourages sustainable practices across supply chains and quantifies contributions to environmental initiatives.
2. Flexibility in Assessment/Assurance of BRSR Core
   • Key Changes:
     • Listed entities can opt for third-party “assessment” (a lighter process) or “assurance” (rigorous audit) for BRSR Core disclosures.
     • New KPIs tailored for Indian/Emerging markets, such as job creation in small towns and gender wage equity, are introduced.
     • Glide Path for Mandatory Compliance:
       Financial Year Top Listed Entities (by Market Cap) –
       2023-24 Top 150
       2024-25 Top 250
       2025–26 Top 500
       2026-27 Top 1000
     • Conflict of Interest Safeguards: Assurance providers must avoid consulting roles with the entity or its group companies.
3. ESG Disclosures for Value Chain
   • Revised Thresholds:
     • Value chain partners are defined as entities contributing 2% or more to the listed entity’s purchases/sales.
     • Disclosures can be limited to cover 75% of total purchases/sales to ease compliance.
   • Deferred Timelines:
     • Voluntary reporting starts from FY 2025–26 for the top 250 listed entities.
     • Mandatory assessment/assurance begins from FY 2026–27.
   • Grace Period: Previous-year data reporting is optional in the first year of disclosure (e.g., FY 2024–25 data can be omitted in FY 2025–26 reports).
4. Cost and Compliance Relief
   • The circular defers value chain reporting requirements by one year to allow SMEs in supply chains to build measurement systems.
   • Industry-specific adjustments in methodologies are permitted, provided they are disclosed transparently.

Conclusion

The new SEBI framework provides a balance of rigour and pragmatism in meeting the challenges for businesses in sustainability reporting. The regulator has brought in green credit disclosures, permit flexibility in assurance mechanisms and phased compliance schedules to promote corporate responsibility without burdening entities, particularly the small value chain players. These steps not only increase global comparability of Indian ESG data but also affirm India’s dedication to sustainable economic development. The effective rollout of these steps, however, will rely on the cooperation of listed entities, assurance providers, and regulators for ensuring transparency and consistency in disclosure. Overall, SEBI reforms are a positive step towards conforming India’s corporate ecosystem with international ESG standards.

^[1] https://www.sebi.gov.in/legal/circulars/mar-2025/measures-to-facilitate-ease-of-doing-business-with-respect-to-framework-for-assurance-or-assessment-esg-disclosures-for-value-chain-and-introduction-of-voluntary-disclosure-on-green-credits_93102.html