Environmental, social, and governance (ESG) reporting in India is no longer optional. Small and medium-sized enterprises (SMEs) face growing pressure from regulators, investors, and supply chain partners to prove their commitment to sustainable development. For many businesses, ESG reporting is now a critical part of corporate sustainability, risk management, and long-term growth.
The ESG reporting landscape in India is rapidly evolving, shaped by new regulatory frameworks such as BRSR and NGRBC, as well as increasing expectations from stakeholders. Understanding and navigating this dynamic environment is essential for SMEs aiming to meet compliance and sustainability goals.
This guide explains how ESG reporting in India affects SMEs, why sustainability reporting matters, and how companies can align with frameworks like the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), which encourage businesses to adopt responsible practices not only within their own operations but also throughout their supply chains and networks.
Key Takeaways
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ESG reporting and ESG disclosure in India are increasingly mandatory, with SEBI’s BRSR framework shaping disclosure standards and specific ESG disclosure requirements.
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SMEs must adopt responsible business practices to meet stakeholder expectations and regulatory compliance.
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Data, technology, and integration into core operations help SMEs strengthen ESG performance and business resilience.
Introduction to ESG
ESG reporting integrates environmental, social, and governance factors into daily business operations. This process is guided by core ESG principles that shape responsible business conduct. In India, this practice reflects a broader push toward sustainable development, corporate social responsibility, and ethical business conduct.
Global frameworks such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) help companies standardize their sustainability reporting. By following these frameworks, businesses can improve transparency and meet international stakeholder expectations.
For SMEs in India, ESG reporting demonstrates alignment with global sustainability goals. The equitable development principle, one of the nine principles outlined in the National Voluntary Guidelines and the BRSR framework, is a key aspect of India's ESG frameworks, supporting inclusive and fair growth. ESG reporting also builds investor confidence and prepares them to compete in markets where ESG compliance is already a requirement.
ESG Reporting and India’s Regulatory Landscape
The Securities and Exchange Board of India (SEBI) has mandated ESG disclosures for listed companies, forming a comprehensive regulatory framework that governs ESG reporting in India. This move emphasizes transparency, accountability, and responsible business conduct across industries.
Over time, ESG regulations in India have evolved significantly, with increasing regulatory mandates shaping how businesses approach sustainability and disclosure obligations.
Key frameworks include:
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National Voluntary Guidelines (NVGs): Encourage companies to adopt responsible business practices across nine principles and mark the beginning of formal business responsibility reporting in India.
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Companies Act: Requires corporate social responsibility (CSR) initiatives and disclosures, reflecting the growing integration of ESG regulations into statutory requirements.
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Business Responsibility and Sustainability Reporting (BRSR): A framework introduced by SEBI to standardize ESG disclosures, building on the historical development of business responsibility reporting and aligning with global sustainability standards.
For SMEs, these frameworks highlight the direction of policy. Public and regulatory policy plays a crucial role in shaping responsible business conduct, ensuring that even businesses not directly mandated are influenced by evolving expectations. While not all SMEs face direct mandates, many operate in supply chains where larger partners require ESG compliance from vendors.
Business Responsibility and Disclosure
What is BRSR?
Business Responsibility and Sustainability Reporting (BRSR) is a mandatory reporting framework for every listed company with significant market capitalization. It replaces the older Business Responsibility Report and introduces a stronger sustainability focus.
BRSR disclosures are typically included in the annual report, which integrates both financial and non-financial information for comprehensive transparency and regulatory compliance.
The BRSR format has three sections:
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General disclosures: Business profile, operations, and governance. Annual reports serve as comprehensive documents for mandatory ESG, business responsibility, and sustainability disclosures.
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Management disclosures: ESG policies, commitments, and leadership indicators.
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Performance disclosures: ESG targets, essential indicators, and outcomes. Climate related financial disclosures are increasingly required as part of ESG transparency.
BRSR aligns with the global trend of publishing a dedicated sustainability report, which showcases a company's ESG performance and commitment to sustainability frameworks.
Why SMEs Should Care
Even though BRSR is mandatory for listed companies, SMEs must understand its scope, especially the importance of managing ESG risks and opportunities across value chains. Supply chain partnerships often require smaller businesses to align with these reporting frameworks to continue doing business.
Additionally, SMEs must demonstrate a responsible manner in their business practices to maintain supply chain partnerships.
Alignment with Global Goals
The Ministry of Corporate Affairs and SEBI aligned BRSR requirements with global principles, including the Sustainable Development Goals (SDGs) and the Paris Agreement. This ensures Indian ESG disclosures are consistent with international expectations. Aligning with global standards also supports ESG investing and attracts responsible investors.
Industry associations can help SMEs understand and implement global ESG standards, making it easier for businesses to meet these expectations.
ESG Performance and Compliance
Measuring ESG Performance
Companies are evaluated on key performance indicators such as:
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Carbon emissions and energy efficiency
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Water and waste management metrics
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Employee welfare and human rights compliance
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Board diversity and governance practices
The BRSR Core framework focuses on nine ESG parameters that provide stakeholders with a holistic view of business responsibility and performance.
Importance of Compliance
Non-compliance can expose SMEs to reputational risks, exclusion from supply chains, or reduced access to financing. By embedding ESG into core business strategies and corporate governance, SMEs strengthen their resilience while meeting regulatory expectations.
The National Guidelines on Responsible Business Conduct (NGRBC) further guide companies on responsible practices, reinforcing the importance of ESG compliance.
Data Collection and Analysis
Collecting accurate ESG data is one of the biggest challenges for SMEs. Without reliable metrics, companies cannot demonstrate progress or identify risks.
Best Practices for SMEs
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Use standardized ESG metrics from frameworks like GRI and SASB.
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Track essential indicators consistently across reporting cycles.
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Apply reasonable assurance standards to build stakeholder trust.
Role of Technology
Advanced tools such as data analytics and artificial intelligence improve ESG data accuracy. These solutions help SMEs analyze sustainability performance, identify opportunities, and enhance reporting frameworks.
Data-driven ESG reporting allows businesses to meet regulatory requirements while also demonstrating accountability to institutional investors, government agencies, and local communities.
Integration with Business Operations
Embedding ESG in Core Strategies
ESG integration means making sustainability a natural part of how businesses operate. SMEs can embed ESG factors into strategic planning, governance policies, and supply chain management.
Responsible Business Practices
Key initiatives include:
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Sustainable sourcing and ethical practices
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Resource efficiency in production and operations
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Waste reduction and recycling strategies
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Community development initiatives supporting local stakeholders
Long-Term Value Creation
By adopting renewable energy, sustainable development initiatives, and ethical value chain practices, SMEs can ensure compliance while improving long-term financial performance.
Conclusion
ESG reporting in India is no longer reserved for large corporations. SMEs must prepare for a future where sustainability reporting, responsible business conduct, and regulatory compliance are essential. By adopting ESG practices early, SMEs can reduce risks, strengthen partnerships, and secure new opportunities in domestic and global markets.
The next step for SMEs is to align with reporting frameworks like GRI, SASB, and SEBI’s BRSR while embedding ESG factors into daily operations. Proactive companies will not only comply with regulations but also gain a competitive edge through sustainable growth.
FAQs
1. What is ESG reporting in India?
ESG reporting in India refers to companies disclosing their environmental, social, and governance practices, aligned with SEBI’s BRSR framework.
2. Why should SMEs adopt ESG reporting?
SMEs adopting ESG reporting meet supply chain requirements, reduce risks, and gain access to investors focused on sustainability.
3. What is the role of SEBI in ESG reporting?
The Securities and Exchange Board of India mandates ESG disclosures for listed companies and sets reporting frameworks for consistency.
4. Are SMEs legally required to publish ESG reports?
Most SMEs are not yet mandated, but indirect pressure from clients, regulators, and investors makes ESG reporting increasingly necessary.
5. What are the key ESG performance indicators?
Indicators include carbon emissions, energy efficiency, employee welfare, governance diversity, and community development outcomes.
6. How does the Companies Act relate to ESG?
The Companies Act mandates corporate social responsibility initiatives, requiring certain firms to invest in community development.
7. What is BRSR Core?
BRSR Core is SEBI’s framework that requires disclosures across nine ESG parameters to ensure transparency and accountability.
8. How does ESG compliance affect financing?
Lenders and investors increasingly prioritize ESG-compliant businesses, making sustainability reporting crucial for financial access.
9. What frameworks can SMEs use for ESG data collection?
Frameworks like the Global Reporting Initiative (GRI) and SASB offer standardized ESG metrics for consistent reporting.
10. How can SMEs integrate ESG into operations?
By embedding ESG strategies into sourcing, supply chains, and governance policies, SMEs align with responsible business practices.
About ESG The Report
ESG the Score makes it easy for small and medium companies to turn sustainability into strength through practical, affordable tools. From ESG reporting kits and supply chain audit guides to IT policy bundles and stakeholder engagement frameworks, we provide everything SMEs need to meet growing expectations. Our quick and effective solutions are designed to help businesses respond to client and regulatory demands without relying on costly consultants or complicated systems. We cut through the noise and give you proven frameworks that make ESG compliance achievable at every stage. With ESG the Score, sustainability becomes simple, smart, and tailored to your business needs.
You may also want to read our ESG Reporting Toolkits for Canada, United States, India, United Kingdom, Australia, Brazil, Singapore, Malaysia, Germany and Turkiye.