Markets regulator SEBI has decided to defer the ESG disclosure deadline for value chain partners of listed companies by one year until FY26.
What has SEBI said?
The proposal, approved by SEBI’s board on Wednesday, is aimed at enhancing ease of doing business for listed companies and their value chain partners in meeting BRSR requirements.
The board approved several relaxations and updates for ESG disclosures.
These include “deferring ESG disclosures for the value chain,” as well as “assessment or assurance” thereof, by one year. Hence, ESG disclosures for value chains shall apply from FY26 (as against the current requirement of FY 2024-25), and “assessment or assurance” thereof shall be applicable from FY 2026-27 (as against the current requirement of FY 2025-26),” SEBI said.
In its statement, SEBI said the board has decided to reduce the scope of the value chain to cover the top upstream and downstream partners of a listed entity, individually comprising 2 percent or more of the listed entity’s purchases and sales (by value), respectively.
Further, entities can limit these disclosures to 75 percent of their total purchases and sales by value.
The impact:
The move gives the value chain partners more time to comply with the Business Responsibility and Sustainability Reporting (BRSR) requirements.
Until then, environmental, social, and governance (ESG) reporting will remain voluntary instead of the current “comply-and-explain” approach, SEBI said.
A company’s value chain includes all activities that add value, from sourcing raw materials and services to distributing and selling products.
It covers both upstream (procurement) and downstream (sales) operations, extending beyond direct activities. This plays a crucial role in the company’s sustainability and ESG efforts.
It must be noted that SEBI has made reporting of previous year data optional for the first year of ESG value chain disclosures. Additionally, a new leadership indicator under Principle 6 of BRSR will mandate companies to disclose green credits generated or procured by the company and its top 10 value chain partners.
The term “assurance” has been replaced with “assessment or assurance.” Assessments will be conducted by third parties based on standards developed by the Industry Standards Forum (ISF) in consultation with SEBI. This applies to BRSR Core disclosures from FY25 for listed entities and FY27 for the value chain.
