Corporate climate reporting framework in India and the world


Both, the recent Intergovernmental Panel on Climate Change (IPCC) report, and the COP at Glasgow amplify the concerns of voices in favor of curbing emissions. This is in line with the Paris agreement as well where almost the entire globe pledged to limit temperature rise to well below 2°C. These ambitious targets of limiting the temperature rise are however difficult to achieve if companies do not comply with recording their greenhouse gases (GHG) emissions and managing it. In order to facilitate the proper accounting of GHG emissions, frameworks like GHG protocol and ISO 14001 audits provide the guidelines for responsible recording, accounting and verification of the six Kyoto Gases emitted during operations and processing at a particular industrial entity. In order to make net-zero commitments successful, companies’ adherence to the green accounting principles will play an important role.

The GHG protocol also serves as the basis for two important principles namely, Science Based Target Initiative (SBTi) and The Climate Related Financial Disclosures (TCFD). These two frameworks play a critical role in defining the flow of capital, as the companies complying with these standards have to adhere to net-zero strategies and trajectories, which defines sustainable and green finance in a portfolio. SBTi decides whether the emission reduction targets are science based or not, while the TCFD makes sure that the climate change concerns of companies are not addressed in silos but holistically. This is done by making the company apprising its board members and investors about the risks and opportunities for the firm due to climate change on a periodic basis. The company is also expected to prepare at least two transition pathways incorporating climate change induced issues, with at least one transition pathway including 2°C or higher temperature rise.

Similarly, the framework governing the investments and finance companies on sustainable finance is European Union (EU) Taxonomy which lays down principles of green finance based on categories defined under the framework. Recognition of the framework by asset managers and investment bankers can be observed by their stress on companies to reveal information on climate change and related parameters. This helps financial institutions to reduce their risks associated with climate change and also manage their portfolio in a better way. Most investors are making green investments and tracking it based on the EU taxonomy. EU is in process of mandating the listed companies operating in the region to disclose information on the EU Taxonomy and TCFD parameters. All these frameworks make sure that firms are aligned to the Paris Agreement and net-zero strategies. It further promotes companies to reduce emissions in order to attract even more funds from investors.

In fact, countries like the US, UK, Japan, Canada, France, and Australia have made it mandatory for companies to report their GHG emissions. For making it mandatory, initially governments identified companies by their revenues. However, over time many developed countries modified their identification process with the number of people employed in the company being the deciding factor, not the revenues.

In India these developments started very late. In March 2012, World Resource Institute (WRI), the Confederation of Indian Industry (CII) and The Energy and Resources Institute (TERI) launched the India GHG Program which aligned with the voluntarily disclosed Nationally Determined Contributions (NDC) for India. The objective was of helping Indian companies to monitor their progress on low carbon pathways in an acceptable and consistent manner. Further, in May 2021 the Security Exchange Board of India (SEBI) released their guidelines on business responsibility and sustainability reporting (BRSR) for the top 1000 listed companies in the financial year. These guidelines are based on the nine principles of National Guidelines on Responsible Business Conduct (NGBRCs) and reporting under each principle is divided into essential and leadership indicators. The essential indicators are mandatory by the government for the companies to report, while the reporting based on the leadership indicators is optional. Again, this framework is expected to attract investment as the principles captured under the BRSR are considered to be more meaningful based on their environmental and social impacts, and thus expected to attract more investor capital. Various international frameworks and protocols like Global Reporting Initiative (GRI), TCFD, Sustainability Accounting Standards Board (SASB) and integrated reports can be replaced by this framework and companies can disclose information under this protocol.

The 2008 economic crisis and the COVID-19 pandemic have made us realise the importance of planning and preparedness. The TCFD makes sure companies look into both acute and chronic risks induced by climate change, and be ready with plans to cope with climate induced financial disruptions and opportunities. Similar guidelines by SEBI are mandatory for top 1000 listed companies in India, irrespective of the economic sector they are involved in. It is to be understood that different kinds of risks are associated with different economic sectors, thus guidelines should differ, considering the relevance of the sector and be made mandatory for companies in some specific sectors prone to risks associated with climate change. Developed countries have already made these guidelines mandatory for a wide range of companies despite their financial performance, hence providing the government with the data to plan and strategies in order to cope up with the economic setbacks due to climate change. A survey was conducted by EY in 2021 to look into the climate risks and preparedness for listed companies globally. The two parameters that define the results in the report include the coverage by companies where organisations were assigned a score on the number of parameters reported based on TCFD recommendation and the quality of disclosures defined as the data points available in public domain, a score of 5 means all the features of aspect were addressed, 3 means aspects discussed in detail, 1 meaning limited disclosures and 0 not publicly available by them.

The graph clearly shows that companies are performing better in the developed countries as compared to the developing. The scores are good for those companies located in areas where the climate regulations are strict by the government and the government itself is leading the steps for emissions reductions. Hence it would not be wrong to say that mandating the framework will help in tracking and then reducing the emissions in a long run. Countries like UK, US, and Canada have a good score both in quality and coverage parameters, while India received a quality score of 28% with 49% disclosures, which is lower than Africa.


The experience of developed countries has shown us that it takes time to mandate companies and increase the coverage on parameters and asset level. In order to make the emissions reduction models work, companies need data to make decarbonization pathways and analyze the cost associated with it. Developing countries like India always have the argument that developmental needs take priority, but a question to be asked is given the critical status of air quality due to pollutants in Indian cities can we really afford to ignore emissions reduction? The listed companies in India should take a step forward and reveal information related to emissions, their strategy to reduce emissions and their preparedness for climate change induced risks to their portfolio. This will not only help the government in planning better as well as attract foreign investments to the Indian market.

Published by Ankit Pal

"Ankit Pal has an academic background in Mathematics with B.Sc. from Fergusson College and M.Sc. from University of Pune. He also holds a master’s degree in Climate Change and Sustainability Studies from Tata Institute of Social Sciences, Mumbai, where he worked on Climate Change Models like NASA-NEX and canESM to make future projections on climatic parameters, Statistical evaluation and downscaling of the model’s data. His interest area includes Index Development, Analysis and Modeling of Climate, Energy and Agricultural Data. In the past he worked with Finance and Investment Banking organisation's where he was with the Data Quality Team for developing Python scripts to ensure the quality of Scope emissions, TCFD and Green Revenues data."

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