Navigating India's Transition to Sustainability | 14 May 2024

Source: PWC

Why in News?

Recently, PwC India, a professional services network has published a report called 'Navigating India's Transition to Sustainability'.

• The Report has focused on sustainability initiatives of leading companies in India.

What are the Key Findings of the Report?

• About:
  • The report analyses how companies are adapting to the Business Responsibility and Sustainability Reporting (BRSR) disclosures mandated by the Securities and Exchange Board of India (SEBI).
  • The analysis covers the BRSR reports of the top 100 companies for the financial year ended 31st March 2023.
  • The business sector is seen as a critical enabler in achieving India's net zero vision by 2070.
    • Net Zero is referred to as carbon neutrality, i.e. achieving an overall balance between greenhouse gas emissions produced and greenhouse gas emissions taken out of the atmosphere.
• Key Findings of the Report:
  • 51% of India’s top 100 listed companies by market capitalisation disclosed their data for FY23 despite it being a voluntary disclosure in BRSR.
  • 34% of the companies have reduced their Scope 1 emissions and 29% have reduced their Scope 2 emissions.
    • Scope 1 covers emissions from sources that an organisation owns or controls directly.
    • Scope 2 is emissions that a company causes indirectly and come from where the energy it purchases and uses is produced.
  • 44% of the top 100 listed companies conducted the life-cycle assessment of their products or services.
  • 49% of companies have increased their energy consumption from renewable sources and 31% of companies have disclosed their net-zero targets.
  • Key initiatives leading to emission reduction include transitioning to energy-efficient technologies such as LEDs, adopting efficient air-conditioning, ventilation, and heating systems, shifting to renewable sources for energy needs, purchasing carbon offsets, and entering into off-site power purchase agreements.

How Significant is the Report for India?

• The report sheds light on India’s journey towards sustainability, emphasising ESG considerations.
  • The report encourages companies to be accountable for their sustainability efforts.
• The report aligns with the BRSR framework introduced by the SEBI. The report serves as a guide for compliance and transparent disclosure.
• The report showcases India’s commitment to sustainability, enhancing investor confidence.
  • Globally, sustainable practices are becoming a competitive advantage, and this report positions India favourably.
• Policymakers can draw insights from the report to shape regulations and policies that promote sustainable practices.
• The shift towards sustainability in India isn't merely about meeting regulations but it's also about fostering growth in a responsible manner.
  • The report emphasises the need to balance economic development with environmental and social well-being.

What are the Initiatives taken to Ensure ESG Compliance in India?

• In 2011, the Ministry of Corporate Affairs (MCA) released the National Voluntary Guidelines (NVGs) on Social, Environmental and Economic Responsibilities of Business, marking an early step in defining ESG disclosure standards for companies.
• The SEBI introduced the Business Responsibility Reports (BRR) in 2012, requiring the top 100 listed entities by market capitalisation to include BRR in their annual reports. This was later extended to the top 500 listed entities in 2015.
  • In 2021, SEBI replaced the BRR reporting requirement with the more comprehensive Business Responsibility and Sustainability Report (BRSR).
• The BRSR seeks disclosures from listed entities on their performance against the nine principles of the ‘National Guidelines on Responsible Business Conduct’ (NGBRCs).
• Companies have the opportunity to use different reporting frameworks in order to show their commitment to ESG practices like Global Reporting Initiative (GRI), Carbon Disclosure Project (CDP), and Sustainability Accounting Standards Board (SASB).