SEBI’s green prod to companies

New Delhi: Indian companies, nudged by the Securities and Exchange Board of India (SEBI), have started reporting on their environmental and sustainability performance, but their submissions lack details and relevant information – finds a survey and assessment done by Centre for Science and Environment (CSE).

In May 2021, SEBI, in a welcome move, had launched an initiative called ‘Business Responsibility and Sustainability Reporting (BRSR)’. Under it, the Board wanted the top 1,000 listed companies in India – identified based on their worth in the stock market – to disclose their non-financial data from 2021 to 2023, including data on “environmental stewardship”. SEBI’s BRSR framework asks for this data for two financial years: the current and the previous.

CSE has reviewed 28 reports submitted by 14 of these top companies. Its assessment, titled ‘Strengthening Environmental Reporting under BRSR (Business Responsibility and Sustainability Reporting)’, is largely focused on data provided by the companies pertaining to their actions and records on environmental stewardship.

Says Nivit Yadav, programme director, industrial pollution, CSE: “We have reviewed the reports for two consecutive years – 2021-22 and 2022-23 – and also analysed the data for three consecutive years: 2020-21 to 2022-23. The primary aim behind our assessment has been to find out how the format can be strengthened to get quality data out in the public domain, which can then be used by policymakers and investors for more informed decision-making.” Shobhit Srivastava, deputy programme manager, industrial pollution, CSE adds: “The criteria for selection of the 14 companies was to have as much diversity as possible in terms of the sector. The selection is random as well, and is based on the availability of reports.”

The problem lies, says CSE, in the way the BRSR format and questionnaire has been designed, and the kind of questions that have been asked of the companies – it leaves room for submission of information which is incomplete, thus defeating the purpose behind the entire exercise: that of creating a reporting structure for Indian companies that would help investors make rational decisions.

SEBI must revise reporting norms

Consolidated company data vs unit-specific data: “Consolidated company data is not always useful,” says Srivastava. An average value which takes into account both good and bad units cannot represent the sustainability of a company, says the CSE assessment. Instead, sustainability can be judged effectively if poor or average performing units are identified and a roadmap is prepared for them to improve their performance on various indicators.

• Data without the rationale behind it: The current BRSR format makes it difficult to understand the reasons behind increase or decrease in valuesand numbers of the parameters.

• Companies tweaking the questionnaire: Companies have often provided data selectively, as per their understanding, and added or deleted rows of information as per their convenience. It should not be left to them to decide how they wish to present the data.