India’s market regulator, the Securities and Exchange Board of India (SEBI), is set to review its ESG disclosure requirements for listed companies, including its delayed plans to mandate supply chain reporting, SEBI chair Tuhin Kanta Pandey said.
The review follows concerns raised by industry stakeholders who argue that current ESG disclosure requirements — particularly on environmental and labour metrics — are overly burdensome, especially for smaller firms. According to a source familiar with the matter, SEBI may consider easing obligations for such companies. The individual declined to be named as the discussions are not yet public.
SEBI’s reconsideration of ESG rules mirrors similar shifts in other jurisdictions. In February, the European Commission proposed exempting thousands of smaller firms from its corporate sustainability reporting requirements, while in the United States, President Donald Trump has rolled back several ESG-focused initiatives.
India continues to score poorly on global ESG metrics. Moody’s Ratings has placed the country in the high-risk category for both environmental and social factors.
SEBI has required the top 1,000 listed firms by market capitalisation to disclose ESG metrics since the 2022–23 financial year. In July 2023, it mandated that the top 250 firms begin reporting on 75% of their supply chain partners — including assurance of the data — starting FY2025–26. However, the regulator eased some conditions in May 2024 and, following further pushback, extended the compliance deadline by one year in December.
“Disclosures must be honest, and there must be the capacity to measure them accurately,” Pandey said. “If they turn out to be just paper disclosures or false disclosures, then that will create another set of problems.”
He emphasised that SEBI will collaborate with industry to ensure firms are equipped to report accurately and will provide sufficient time to meet requirements.
The upcoming review, due to commence next month, has not been previously reported. Pandey, who assumed office in March, did not specify whether the final rules would be less stringent or what form any changes might take. SEBI has yet to respond to a request for comment.
The regulator’s broader approach will be guided by a philosophy of “optimal regulations,” Pandey said, indicating that this principle will also inform reviews of other disclosure norms, including those related to related-party transactions.
“Rather than taking a sledgehammer approach, we should be more fine-tuned in regulations,” he remarked.
Under Pandey’s predecessor, Madhabi Puri Buch, SEBI had significantly strengthened disclosure norms for investors, asset managers, and listed entities.
Pandey also confirmed that SEBI is reviewing nearly 800 responses to a recent consultation on proposed changes to the calculation of open interest in derivative markets. The proposals, aimed at mitigating risk in the fast-growing derivatives sector, were criticised by the Futures Industry Association, which warned they could reduce market liquidity, raise trading costs, and increase operational burdens.
While acknowledging the need for “guardrails,” Pandey said the regulator remains committed to fostering the growth of India’s derivatives market.
