“The proposed format for BRSR aims at bringing in greater transparency through disclosure of material ESG-related information that would allow market participants to identify and assess sustainability-related risks and opportunities,” Tyagi said in a press statement released by the regulator.
Sebi in August released a consultation paper regarding improvements in the disclosure format of the mandatory business responsibility and sustainability report given the rising demand on asset managers to invest in companies that score highly on environment, social and governance metrics.
The round-table discussion which was moderated by Sunil Sanghai, who chairs the Committee on Capital Markets at the Federation of Indian Chambers of Commerce and Industry, centered around enhancing key environment, social and governance disclosures. Such disclosures are of importance to both investors and other stakeholders
Socially conscious investing has been all the rage abroad, but lately in India, too, asset management companies have come out with several funds to attract investors who want to invest in companies that score highly on environment, social and governance metrics.
ESG investing is a style of investing where asset managers consciously weed out companies from their investable universe that do not score highly on corporate governance, environmentally-conscious business practices and strong social responsibility.
Globally, ESG-themed assets under management are well over a third of the global assets under management. In India, in just the last two years at least seven schemes have been launched that claim exclusively ESG-only funds with overall assets of such schemes a little under Rs 1,000 crore.
Industry experts are worried that without a uniform definition of what ESG investing entails and what parameters qualify for filtering of the investable universe for the purpose of investment, it will further lead to confusion among investors.
Kaustubh Belapurkar, director and manager research at MorningStar Investment Advisers India, said that companies earlier did not pay much attention to ESG, but are realising that they lost out on a lot of foreign capital flows because of it.
National Stock Exchange’s managing director and chief executive officer Vikram Limaye in July had said, “ESG disclosures need to be better articulated to motivate companies and boards to make improvements in this area, and not to treat it as a check the box compliance.”
Sebi in its 77-page consultation paper had given detailed format for disclosures by companies, which was largely divided into three sections: general, management and process and principal-wise.
Under the principal disclosures, the regulator recommended that companies report “essential” and “leadership” information.
While the essential level is expected from every business that has adopted these guidelines, the leadership level is expected of businesses which aspire to progress to a higher level in their quest to be socially, environmentally and ethically responsible, the regulator had said in the paper.
“Our effort will be to finalise the new disclosure requirements for sustainability reporting, keeping in mind a balance between the Indian context, our national priorities and preparedness, with global relevance,” Tyagi said.
