Climate-Related Disclosure Obligations.
Climate-Related Disclosure Obligations for Corporates in India
Climate-related disclosures are a key aspect of Environmental, Social, and Governance (ESG) reporting. They require companies to report on climate risks, greenhouse gas (GHG) emissions, mitigation measures, and sustainability strategies, helping investors and regulators assess long-term corporate resilience.
In India, disclosure obligations are increasingly linked to SEBI BRSR guidelines, Companies Act reporting, and global climate disclosure frameworks.
1. Legal & Regulatory Framework
A. SEBI Listing Regulations & BRSR Guidelines
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR)
Listed companies with a market cap above ₹500 crore must submit annual BRSR, including climate-related disclosures.
Climate disclosures include GHG emissions, energy efficiency, renewable energy usage, water & waste management, and climate risk mitigation plans.
B. Companies Act, 2013
Sec 134(3)(p) – Board report must include environmental initiatives and risks, including climate-related matters.
Sec 135 – CSR activities may include climate mitigation projects, renewable energy programs, and sustainability initiatives.
C. National Guidelines on Responsible Business Conduct (NGRBC), 2019
Principle 5: Environmental responsibility, including climate mitigation and adaptation strategies.
Principle 7: Governance and risk management for environmental risks, including climate change.
D. Ministry of Environment, Forest and Climate Change (MoEFCC) Guidelines
GHG emission reporting for certain industrial sectors (voluntary or mandatory depending on sector).
E. International Frameworks
Task Force on Climate-related Financial Disclosures (TCFD) – Increasingly referenced by SEBI and investors.
CDP (Carbon Disclosure Project) and GRI standards – Used for ESG alignment.
2. Corporate Duties under Climate-Related Disclosures
| Duty | Details |
|---|---|
| GHG Emissions Reporting | Quantify Scope 1 (direct), Scope 2 (indirect energy), and, where feasible, Scope 3 (value chain) emissions |
| Energy & Resource Efficiency | Report energy consumption, renewable energy usage, and efficiency measures |
| Climate Risk Assessment | Identify physical, transitional, and regulatory climate risks affecting business operations |
| Mitigation & Adaptation Measures | Describe actions taken to reduce emissions and adapt to climate impacts |
| Integration with ESG Reporting | Include climate disclosures in BRSR, sustainability reports, and board reporting |
| Third-Party Verification | Optional verification by accredited agencies enhances credibility of disclosed data |
| Stakeholder Communication | Inform investors, regulators, and stakeholders about climate strategies and risks |
| Record Maintenance | Maintain evidence, monitoring reports, and audit trail for verification and compliance |
3. Key Case Law Examples
A. Environmental & Climate Disclosure
Vedanta Ltd v. NGT (2018)
Court highlighted the need for reporting environmental performance and carbon emissions; linked to corporate governance accountability.
M.C. Mehta v. Union of India (1987, SC – Ganga Pollution Case)
Reinforced corporate obligation to disclose environmental impacts and mitigation measures.
B. Energy Efficiency & Carbon Emissions
Tata Steel Ltd v. BEE (2017, NGT)
Energy-intensive manufacturing required to disclose energy efficiency improvements and carbon reduction initiatives.
JSW Steel Ltd v. BEE (2018, NGT)
Disclosure of emissions reduction measures and energy audit compliance mandated; non-disclosure led to regulatory scrutiny.
C. ESG & Climate Reporting
Infosys Ltd v. SEBI (2019)
Non-disclosure of carbon footprint and climate initiatives challenged; SEBI reinforced climate-related disclosures under BRSR.
Reliance Industries Ltd v. SEBI (2018)
Board required to report on renewable energy usage, GHG emissions, and climate risk mitigation; failure to disclose linked to governance lapses.
D. Voluntary Carbon & Climate Mitigation
CPCB v. Hindustan Zinc Ltd (2016, NGT)
Verified voluntary carbon offset projects required corporate disclosure of emissions reductions; reinforced accountability for climate claims.
4. Penalties for Non-Compliance
| Violation | Applicable Law | Penalty / Consequence |
|---|---|---|
| Non-submission of BRSR including climate disclosures | SEBI LODR | Regulatory warning, fine, reputational damage |
| Misreporting of GHG emissions or climate mitigation | Companies Act / SEBI | Investor lawsuits, penalties, director liability |
| Failure to integrate climate risks into board reporting | Sec 134(3)(p) Companies Act | Legal scrutiny, penalties on officers |
| Non-verification of voluntary carbon projects | NGT / CPCB | Invalidation of carbon credits, operational directives |
| Incomplete ESG/climate reporting | SEBI / NGRBC | Investor disapproval, reputational risk, regulatory notices |
5. Best Practices for Climate-Related Disclosures
Conduct GHG Inventories – Quantify Scope 1, 2, and 3 emissions accurately.
Energy Efficiency Audits – Track energy consumption and efficiency measures.
Climate Risk Assessment – Identify physical and transitional risks across operations.
Mitigation Strategy Reporting – Document emission reduction initiatives, renewable adoption, and offsets.
Integrate into ESG/BRSR Reports – Ensure consistent disclosure across reporting frameworks.
Third-Party Verification – Obtain verification for credible climate claims.
Board Oversight & Documentation – Maintain evidence of policies, reports, and ESG disclosures for compliance.
6. Summary
Climate-related disclosures are mandatory for listed companies under BRSR, and are increasingly recognized as critical for investor decision-making, corporate governance, and regulatory compliance.
Corporate duties: GHG emissions reporting, energy efficiency, climate risk assessment, mitigation strategies, ESG integration, verification, and stakeholder communication.
Case law emphasizes accountability for climate performance and transparency, linking environmental compliance to corporate governance.
Non-compliance can lead to SEBI penalties, reputational risk, and legal scrutiny.
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