India’s BRSR framework lacks detailed climate transition planning aligned with global standards.
Global investors increasingly demand credible, standardised climate transition disclosures from companies.
Weak climate reporting could raise financing costs and restrict access to global capital.
Weak Climate Disclosures Risk Limiting Indian Firms’ Global Capital Access, Says Report
A study warns gaps in India’s sustainability disclosures may weaken global investor confidence
India’s corporate climate disclosures are under scrutiny as global sustainability standards tighten
Summary
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Indian companies risk being left behind due to gaps in the country’s Business Responsibility and Sustainability Reporting (BRSR) framework, Down To Earth reported citing a study published by the Institute for Energy Economics and Financial Analysis (IEEFA).
The study compares India’s mandatory BRSR disclosures with the International Sustainability Standards Board’s (ISSB) climate standard (S2). The study concludes that while BRSR provides a broad ESG lens and stronger social indicators, it falls short on climate-specific transition planning, which is becoming more and more important for international investors, lenders and insurers.
Financing Risks Mount
The report cautions that if disclosures continue to be high-level and non-standardised, Indian corporations may face increased financing costs or decreased access to capital as sustainable finance markets increasingly demand credible, forward-looking transition plans. Investors from around the world are now looking beyond emissions inventories to understand how businesses intend to manage climate risks, finance the transition and decarbonise.
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“Without robust transition disclosures, Indian firms may struggle to meet the expectations of international capital markets that are aligning with ISSB standards,” Down To Earth reported citing the study.
ESG Strong, Climate Weak
According to Down To Earth, IEEFA recognises that BRSR outperforms ISSB in certain areas, especially when it comes to metrics related to social responsibility and community engagement. However, it highlights inadequate handling of climate-related stakeholder dependencies, which are essential to credible transition planning and include supplier emissions, workforce transitions, and customer exposure.
On the other hand, ISSB S2 offers comprehensive guidelines in areas where BRSR is still primarily aspirational, such as climate governance, risk management, scenario analysis and capital deployment.
Climate Finance Signals Shift
Global financial flows are increasingly being aligned with climate action goals, indicating the growing importance of credible climate disclosures for companies.
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In order to achieve global objectives, the Organization for Economic Co-operation and Development (OECD) monitors the mobilisation of climate finance, pointing out that private finance mobilisation is essential to expanding climate action, including clean energy and adaptation projects. According to OECD data, developed nations surpassed the $100bn annual climate finance target in 2022, indicating a closer fit between financial systems and climate goals. To evaluate a company's preparedness for low-carbon pathways, investors are increasingly demanding clear, consistent climate transition data.