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SEBI to Review ESG and Supply Chain Disclosure Rules

17 April 20251 min read
BANKING & FINANCESEBI to ReviewESG and SupplyChain DisclosureRules17 April 2025safalsetu.com

Why in the news

SEBI will broadly review ESG disclosure rules after companies complained about cost and complexity, notably for supply chain data.

Timeline

WhenDevelopment
FY23ESG disclosure made mandatory for top 1,000 listed firms
July 2023Top 250 firms asked to cover 75% of supply chain partners and get third-party assurance from FY26
May 2024Requirement eased
December 2024Deadline extended by a year

Reasons for the review

  • Firms struggled to measure and assure ESG metrics, with data gaps and supply chain complexity.
  • Pandey cautioned that paper-only or false disclosures would worsen matters; SEBI wants capacity building.
  • Globally, the EU proposed small business exemptions, and the US showed resistance to ESG mandates. India’s ESG score is low.

Also under review

  • Related party transactions: more proportionate rules.
  • Derivatives: 800+ responses on measuring open interest.
  • Approach: optimal regulation, not sledgehammer measures.

Exam angle

  • ESG: Environmental, Social, Governance.

Test yourself

1. Since FY23, SEBI has mandated ESG disclosures for how many top listed companies by market capitalisation?

The top 1,000 listed companies must make ESG disclosures.

2. In July 2023, SEBI asked the top 250 companies to report ESG data for what share of supply chain partners?

The requirement covered 75% of supply chain partners.

3. Which principle did SEBI say it will adopt in its regulatory approach, as per the notes?

SEBI will follow optimal regulation instead of sledgehammer measures.