Sustainability as defined by International Sustainability Standards Board (ISSB). "The ability for a company to sustainably maintain resources and relationships with and manage its dependencies and impacts within its whole business ecosystem over the short, medium and long term".

The 18th G20 session concluded in India focused on accelerating actions on climate change, degradation of land and possible solutions to it. Protecting biodiversity from losses helping ecosystem restoration, promotion of efficient resources and an economy addressing pollution within its framework. These goals were also discussed in the COP 27 with major focus on limiting the global warming to 1.5 degrees resulting in net zero CO2 emissions and the role of corporate bodies in the achievement of this target. Climate change as a phenomenon is a real challenge and we must deal with it with strict implementation and roadmaps.
 
In light of the same theme, the Securities and Exchange Board of India took this responsibility to make the corporate houses responsible for their actions towards the environment for a better sustainable future and introduced Business Responsibility Report (BRR) in the year 2012 as part of its annual report for top 100 listed company. Later, in 2015 SEBI included the top 500 listed companies. With the increase in challenges of managing and implementing the laws, SEBI in 2021 came up with a new format of report called as Business Responsibility and Sustainability Report (BRSR) replacing the older version making a mandatory obligation for top 1000 listed companies.

Since time long, the Government of India with the prospect of protecting the environment has tried to mainstream the responsibility of corporates and corporate governance. In the year 2009, Ministry of Corporate Affairs came up with 'Voluntary Guideline on Corporate Social Responsibility' with beginning of Environment Social and Governance (ESG) reporting in India. This was followed by the National Guidelines on Responsible Business Conduct in 2019.

The Background Of Esg Reporting

The ever-increasing concern of environmental degradation has led to the companies shift their approach towards the environment connecting it to social and governance pattern. The sustainable reporting at the global level is seen as a new dimension in approach towards responsible behaviour across the globe. It is a positive change that has become part of Indian companies as well to reorient their profit earning purpose and extend it towards reaching a sustainable growth.

In India, The Business Responsibility and Sustainability Reporting came into being for the very first time in 2009 with the introduction of 'Voluntary Guidelines on Corporate Social Responsibility' introduced by the Ministry of Corporate Affairs. This was the first step that helped to bring corporate social responsibility into light for all corporate houses. This radicle shift was deeply in connection with addressing growing concern of the different stakeholders in a corporation focusing on sustainability.

The United Nations Human Rights Council (UNHRC) adopted the United Nations Guiding Principles on Business and Human Rights (UNGPs) in June 2011, which were endorsed by India. These principles were thereafter adopted by the Ministry of Corporate Affairs in India, to introduce the 'National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business' (NVGs) in July 2011.
 

Concerns of the Stakeholders

• Investors – The major stakeholder in any corporation is its investors. It is crucial to have their say in policy-making decisions of the company. With the increased focus on sustainability, the investors have concerns related to good financial returns along with good business efficiency.
• Shareholders – The shareholders of any entity are concerned about transparency and integrity along with formulating and following the code of conduct of the business. With the policy decisions in combination with sustainability, the shareholders become concerned about the performance of the company.
• Employees – There is always an additional concern on the part of the employees, as they are always at the receiving end. Any change in policy decisions impacts them the most. The major concern for them remains adequate benefits and compensation along with occupational health and safety.
• Customers – Any shift towards a new sustainable process will directly impact the pockets of customers and they have genuine concerns about the paradigm shift towards sustainability of any corporation. The customer demands high quality of products and services at a reasonable price which gives them value for money.
• Government – Since governments have to walk hand in hand complying with international conventions and treaties, it is a concern for any government that the companies comply with the rules and regulations framed by them. The companies should cooperate in a transparent manner to ensure effective implementation.
• Communities – When any industry is established in a particular area, the local communities are most vulnerable to it. It is they who suffer the direct consequences of the operations of the industry. Their concerns include minimal impacts on the surrounding environment along with local employment. Sustainable growth will help these local communities in their development.

In the present world, sustainability is something that investors are demanding, customers are expecting, shareholders are relying on, and employees are valuing. Due to a change in consumer behaviour and preferences, the demand for stringent regulations by investors for non-financial disclosures has increased globally.

Evolution of Environmental, Social and Governance Reporting

Global Reporting Initiatives (GRI)

The first record of GRI as an institution is found as early as 1997 in Boston, USA. The main function of this organization was to enable businesses in accessing and disclosing their economic, environmental, and social performance. With time, GRI became the most widely used standard for any sustainable reporting. Its success can be measured by the fact that around 250 corporations across the globe have adopted its format. The function of GRI is to disclose their non-financial performance and help them assess their activity and its impact on the environment, helping them find ways through which they can contribute towards sustainable development.

United Nations Global Compact Principles

The United Nations Global Compact 10 principles are derived from:

• Rio Declaration on Environment and Development
• Universal Declaration of Human Rights
• The International Labour Organization's Declaration on Fundamental Principles and Rights at Work
• The United Nations Convention Against Corruption

It helps companies to shift towards a principle-based approach which can lead to sustainability based on the core human rights values, environment, standards of labour practice and anti-corruptions.

Corporate Sustainability In India
With a paradigm shift in the Corporate Social Responsibility regime across the globe and to ensure responsible conduct of business at par with international frameworks, the Government of India in 2011 established National Voluntary Guidelines (NVG) which was based on environment, economic and social responsibilities. This was followed by the Securities and Exchange Board of India (SEBI) which mandated the top 100 listed companies in BSE and NSE to disclose their corporate social responsibility initiative and their compliance with the NVG's framework in 2012 and termed it as Business Responsibility Report (BRR).

In 2013 India became the first country to make a legislation regarding compulsory spending of profits on CSR. Sec 135 of Companies Act[1], 2013 makes it compulsory for the companies with minimum net wort of 500 crore or turnover of 1000 crore or net profit at least 5 crores to spend a minimum of 2% of their previous 3 consecutive year's profit. The RBI's notification dated 20th November 2007 (RBI 2007–2008/216) highlighted banks need to act with responsibility and contribute to sustainable development so that the adverse impact on the environment can be reduced[2].

In the year 2015, the United Nation General Assembly adopted Agenda 2030. This agenda consisted of 17 sustainable goals and a mechanism to track and review using various indicators. To follow the UN's sustainable development goals, several changes were introduced in the NVG's. In 2015, SEBI revised its earlier guidelines to include top 500 companies to mandatorily file BRR from FY 2015-2016 onwards[3]. These amendments were brought following the increased scrutiny and awareness among investors.

Amidst rising global concern, a series of revisions were made by SEBI and it ultimately in 2019 announced a revised form of NVG named National Guidelines on Responsible Business Conduct (NGRBC). These changes were embraced to help corporations move forward with new sustainable goals and finally top 1000 listed companies were mandated to publish their BRR in their respective annual report[4].
 
Business Responsibility And Sustainable Reporting
The Securities and Exchange Board of India (SEBI) defined ESG disclosures in a standardized manner for listed companies based on which, the Business Responsibility and Sustainability (BRSR) guidelines were issued[5].

Major Highlights of BRSR:

1. Matching the global reporting standards: While preparing sustainability report, these companies can now refer to the international disclosures under GRI, TCFD etc. The format of BRSR reporting is made available on the website and is open to cross refer to check dual reporting if any.
2. Disclosures related to social assessment and environment: the new reporting format gives importance to environment and social impact with focus on environment and social assessments taken by the companies.
3. Thrust to maximise the impact: the corporate sustainability aims at creating awareness whereby the new format of mandatory disclosure requirements will enable the companies to reassign their corporate purpose with respect to environment, social and governance dimension.

The Road Ahead
Since the advent of Environment, Social and Governance reporting norms, SEBI has been amending the reporting process to follow the international norms keeping it at par with domestic requirements. Though the step taken is on positive note and need of the hour, seeing the rise in global warming and to tackle challenging population pressure, it becomes crucial to address the complexities in such reportings. Major challenges faced by the companies are 3 folds,

Firstly, they face challenge in filing the report due to constant change in the format. Recently the amendment has brought a significant change whereby the number of questions has increased from 59 in the earlier reporting to whooping 140. Updating the policy framework makes it difficult and time taking for the companies to mold themselves as per the guidelines. The government should ensure a swift reporting process so that the process in itself becomes easy passage for the purpose to be achieved.

Secondly, the involvement of cross departmental inputs has made the reporting a bit lengthy, as in the process of collecting data from different departments, it becomes a time taking and complex process which results in non-reporting by various companies as mentioned from the data above. SEBI should ensure that the departmental framework should be in such a manner as to ensure easy collection of required data for reporting.
Thirdly, with the new and detailed framework of reporting, the expectation of the stakeholders gradually increased and has led to a complex situation whereby keeping efficiency with the environment along with good profit margin has become a real challenge for the companies.

The increased ESG performance index automatically results in high manpower and technology innovation requirements at regular time frames to keep at par with the developing norms. This problem can be solved by the government's intervention by supporting the cause and aiding the companies with rewards and concession who attain the goals and are constantly working towards a sustainable development. A special provision must be made for the new players in the market, so that they get budding time to establish themselves.

Sustainability as a goal has been the very essence of introduction of the ESG norms. The world we live has limited resources and it must be utilised with utmost care and caution by each and every individual. The same responsibility has been incurred on the corporate sector. They must practice environment friendly method. As the above study suggests, 53% of the companies publish BRR and 72% of them are following GRI norms. The above study denotes, that Indian companies are well versed with their responsibility towards sustainable developing goals and it's reporting as per norms.

It is noted that most of the companies are following the norms but to implement the ESG norms in successful manner, the norms should be easy and moulded in such a manner that becomes easy for the companies in publishing their business responsibility and sustainability reporting. It has also been noted that the company's following BRSR reporting getting a good number of international investors therefore companies are successfully implementing sustainable practices in order to match the competition at global level and attract more investors.

SEBI has succeeded in driving the ESG reporting and taking it beyond regulatory requirements. It is co consistently taking actions in order to implement the same. The pressing need of the hour is to address the climate change risk and focusing on the solutions that can give tangible outcomes. These reporting should not only be considered as a norm rather they should be seen as a compulsory step towards ensuring a sustainable supply chain and promoting equity, diversity, and inclusivity in addressing the sustainable goals.

Further these goals will ensure a reduction in carbon emission and shift towards a green environment which we can handover to our next generation. Seeing the recent development, we can be optimistic that these sustainable goals can we achieved, and we can ensure a hand in hand development of the corporate sector without harming our environment.
 
Reference:

1. https://www.ey.com/en_in/climate-change-sustainability-services/brsr-reporting-and-the-evolving-esg-landscape-in-india
2. https://www.researchgate.net/publication/370903102
3. Journal Management Business Responsibility Finance 13: 61-70.
4. Bhalla R, Bansal SK (2014) Corporate Sustainability Reporting: A Study of Economic Sustainability Aspects by Selected Indian Corporations. Internal Journal Current Responsibility Academic Review 2: 37-4
5. Goel, P., & Misra, R. (2017). Sustainability reporting in India: Exploring sectoral differences and linkages with financial performance. Vision: The Journal of Business Perspective, 21(2), 214-224. doi:https://doi.org/10.1177/0972262917700996
6. Suprita P (2018) Emerging Significance of Sustainability Accounting and Reporting in India- A Conceptual Study. Internal Journal Accounting Responsibility 6: 180. doi:10.35248/2472-114X.18.6.180
7. Kumar, K.S.V. and Devi, V.R. (2015), "Sustainability reporting practices in India: challenges and prospects", paper presented at the Twelfth AIMS International Conference on Management, IIM, Kozhikode, 2-5 January, available at: www.aims-international.org/aims12/12A-CD/PDF/K465-final.pdf
8. Motwani, S. S., & Pandya, H. B. (2016). Evaluating the impact of sustainability reporting on financial performance of selected Indian companies. International Journal of Research in IT & Management, 5(2), 14-20.
9. Jain, S. K., & Batra, G. (2014). Sustainable reporting: A preliminary analysis of adoption of GRI framework by Indian corporate sector [Paper presentation]. Business Sustainability: Issues and Challenges of the 3rd Annual Commerce Convention on Leveraging Business: Discovering New Horizons, University of Delhi, Delhi, India.

End Notes:

1. https://www.mca.gov.in
2. RBI / 2007-2008/32 DBOD.FSD.BC.17 / 24.01.011/ 2007-08
3. https://www.mca.gov.in/Ministry/pdf/BRR _110 Page 12
4. https://www.mca.gov.in/Ministry/pdf/BRR _110 Page 12
5. NationalGuildeline_15032019.pdf (mca.gov.in)