Sustainability Disclosures have evolved from voluntary initiatives to legal and regulatory imperatives across many jurisdictions. As environmental, social, and governance (ESG) issues gain prominence in corporate strategy and investment decision-making, governments and regulatory bodies have introduced mandatory frameworks to ensure transparency, accountability, and comparability in sustainability reporting. These legal requirements aim to standardize disclosures, prevent greenwashing, protect investors, and align corporate practices with national and global sustainability goals such as the UN Sustainable Development Goals (SDGs) and the Paris Climate Agreement.
India: SEBI’s Business Responsibility and Sustainability Reporting (BRSR)
In India, the Securities and Exchange Board of India (SEBI) has mandated ESG disclosures through the Business Responsibility and Sustainability Report (BRSR) framework. From FY 2022–23 onwards, the top 1,000 listed companies by market capitalization are required to file BRSR reports in place of the earlier Business Responsibility Report (BRR).
Key features:
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BRSR is aligned with global frameworks like GRI, TCFD, and IRIS+.
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It includes quantitative and qualitative disclosures on emissions, gender diversity, ESG risks, and responsible business conduct.
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Disclosures are divided into general, management, and leadership indicators.
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Voluntary for other listed companies but expected to become more widely adopted.
This step is part of SEBI’s larger agenda to promote responsible investing and ESG compliance in capital markets.
European Union: Corporate Sustainability Reporting Directive (CSRD):
European Union (EU) has been at the forefront of ESG regulations. Its Corporate Sustainability Reporting Directive (CSRD), adopted in 2022, significantly expands the scope and depth of mandatory sustainability reporting.
Key features:
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Applies to all large EU companies (with over 250 employees or turnover over €40 million) and listed SMEs.
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Requires disclosure on environmental matters, social rights, human rights, anti-corruption, and governance.
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Mandates use of the European Sustainability Reporting Standards (ESRS).
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Requires digital reporting in machine-readable format for transparency and data comparability.
The CSRD replaces the earlier Non-Financial Reporting Directive (NFRD) and is expected to cover over 50,000 companies in the EU.
United States: SEC’s Climate-Related Disclosure Rules (Proposed):
U.S. Securities and Exchange Commission (SEC) has proposed rules to enhance and standardize climate-related disclosures for public companies.
Key features (proposed):
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Disclosure of climate-related risks and their impact on financial statements.
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Emissions reporting (Scope 1, 2, and in some cases Scope 3).
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Governance practices around climate risk oversight.
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Metrics and targets used to manage ESG performance.
Although still under review, this regulation is expected to significantly improve transparency and comparability of sustainability information in U.S. capital markets.
United Kingdom: TCFD-Aligned Disclosures:
The UK government requires large companies and financial institutions to report in line with the Task Force on Climate-related Financial Disclosures (TCFD).
Key features:
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Applies to over 1,300 of the largest UK-registered companies and financial institutions.
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Mandatory disclosure of governance, strategy, risk management, and metrics related to climate risks.
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Supports the UK’s goal of achieving net-zero emissions by 2050.
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Forms part of broader green finance initiatives in the UK.
The UK’s regulations are among the earliest to legally embed climate risk disclosure practices.
International Standards: ISSB and IFRS S1 & S2:
The International Sustainability Standards Board (ISSB), established under the IFRS Foundation, has introduced IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures).
Key features:
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Global baseline standards applicable across jurisdictions.
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Align with TCFD and other leading frameworks.
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Aim to provide consistent, comparable, and decision-useful sustainability data.
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Support interoperability with local standards like BRSR, CSRD, and SEC rules.
While not legally binding, ISSB standards are expected to be adopted by regulators worldwide, making them highly influential.
Other Jurisdictions and Voluntary Frameworks:
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Japan: Tokyo Stock Exchange mandates ESG disclosures for listed companies under its corporate governance code.
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South Africa: Integrated reporting, including sustainability information, is required under the King IV Code.
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Australia and Canada: Moving toward mandatory climate and ESG disclosures through financial regulators.
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Global Voluntary Standards: GRI, CDP, SASB, and IRIS+ still play a vital role in shaping company disclosures and investor expectations.