Evolving sustainability reporting requirements reflect an increasing shift towards embracing environmental and social responsibility. About 51 per cent of India’s top 100 listed companies by market capitalisation disclosed their Scope 3 data for FY23 despite it being a voluntary disclosure in Business Responsibility and Sustainability Reporting (BRSR), revealed a report by PwC India.
This underscores the fact that Indian businesses are taking a step further in ESG reporting as Scope 3 emissions are crucial to understand an entity’s net zero journey.
Scope 3 spans 15 different categories in total. The upstream ones include emissions produced by the external parties that source, produce and transport the raw materials and components businesses use. Other upstream categories include business travel and employee commuting as well as emissions from waste generated and assets leased.
On the downstream side are emissions from the logistics, use and disposal of the company’s products. Downstream emissions also cover those from activities like investing and franchising.
Approximately 34 per cent of the companies have reduced their Scope 1 emissions and 29 per cent have reduced their Scope 2 emissions. About 49 per cent of companies have increased their energy consumption from renewable sources, while 31 per cent of companies have disclosed their net-zero targets, the report said.
Key initiatives
The key initiatives which led to a reduction in emissions include, transitioning to energy-efficient technologies such as LEDs, adopting efficient air conditioning, ventilation, and heating systems, shifting to renewable sources for securing energy needs, purchasing carbon offsets, and entering into off-site power purchase agreements.
The introduction of regulations like the BRSR by the market regulator SEBI which mandates the top 1,000 listed companies to disclose their performance with respect to various E, S, and G parameters highlights the growing importance of corporate sustainability in India’s growth story. In fact, India has emerged as one of the frontrunners to transition to a credible sustainability reporting landscape through the introduction of the BRSR Core.
The report highlighted that about 44 per cent of the top 100 listed companies conducted the life-cycle assessment of their products or services. Additionally, approximately 89 per cent of the companies disclosed their information on leadership indicators.
“With the BRSR becoming a mandatory report for businesses, ESG considerations have become key strategic priorities in boardroom discussions. This is a testimony of the enhanced awareness of the importance of sustainability and responsible business practices,” said Sambitosh Mohapatra, Partner & Leader, ESG, PwC India.
ESG reporting
ESG reporting through the BRSR has ushered in greater transparency and a holistic view of a business’s environmental and societal impact, thus, enabling investors and other stakeholders to form key decisions through an ESG lens, make comparisons across companies and sectors, and track progress over time.
As India commits to achieving its net zero vision by 2070, the business sector is being viewed as a critical enabler in furthering this ambition, the report asserted.
The government and the regulators have introduced new regulations pertaining to ESG for businesses. India’s transition to BRSR Core positions the nation as a frontrunner in the global transition towards a more credible and transparent sustainability reporting landscape.
