BRSR’s next challenge: Better decisions, not just more data

Over the past few years, the conversation around sustainability disclosures has moved well beyond corporate responsibility and stakeholder communication. Today, investors increasingly view sustainability data as a critical lens to assess business resilience, risk exposure, operational efficiency, and long-term value creation. Whether evaluating climate transition preparedness, supply chain bottlenecks, human capital management or governance quality, sustainability factors are becoming intricately linked to business performance and capital allocation decisions.

This paradigm shift is reflected in the growing expectations placed on corporate disclosures. In India, the Securities and Exchange Board of India (Sebi) has proactively responded through the Business Responsibility and Sustainability Reporting (BRSR) framework, now mandatory for the top 1,000 listed companies by market capitalisation. More recently, the introduction of BRSR Core has strengthened this framework by identifying a set of key ESG metrics subject to mandatory assurance. This is a vital step towards improving consistency, reliability and comparability of the sustainability information available to investors.

Together, these developments represent a significant leap towards making sustainability disclosures more decision-useful for capital markets. Globally, regulators and market participants are no longer just asking for compliance; they are asking a more fundamental question: How is a business prepared to navigate future risks and opportunities?

What India’s sustainability reporting journey reveals

India’s sustainability reporting ecosystem has matured significantly in a relatively short period.

CFA Institute’s ‘The Current State of BRSR in Corporate India 2.0’, a recent analysis of sustainability disclosures from 300 listed companies, revealed that businesses are now moving beyond compliance. They are becoming more systematic in how they measure, manage and communicate sustainability data.

Climate and energy-related reporting, for instance, has become significantly more widespread, indicating that companies are tracking environmental performance with greater precision. There is also growing visibility in supply chains, reflecting a broader recognition that business risks often extend well beyond an organisation’s direct operations.

Another encouraging trend is the rising disclosure of capital directed towards cleaner technologies, resource efficiency, and sustainability-linked improvements. This suggests that sustainability is migrating from the reporting department to the boardroom, gradually becoming embedded in strategic planning and capital allocation.

Why decision-useful sustainability reporting matters

The fundamental purpose of corporate reporting has always been to bridge information gaps and support better decision-making. Just as financial disclosures enable investors to assess performance, allocate capital, sustainability disclosures should help stakeholders understand how companies are managing issues that will dictate their future resilience.

For businesses, robust sustainability reporting strengthens risk identification, sharpens strategic planning and optimises resource allocation. For investors, it provides a window into operational efficiency, climate preparedness, and governance practices.

However, more disclosures do not automatically translate into better decisions.

The true utility of sustainability information depends on whether stakeholders can compare performance across peers, understand the assumptions underpinning the data, and assess how these factors will influence future financial outcomes. Without these attributes, disclosures may increase transparency, but they fail to improve decision-making. As sustainability considerations become deeply integrated into investment strategies, the emphasis must shift from reporting more information to reporting useful information.

Moving from disclosure to insight

This progress deserves recognition. Yet maturity also brings new expectations. As reporting practices improve, the next phase of BRSR’s evolution should address a few critical challenges to maximise its value for capital markets.

The first major hurdle is comparability. Investors and analysts need to compare companies across sectors and over multiple years to identify trends and risks. When companies disclose similar information using divergent methodologies, reporting boundaries, or measurement approaches, the analytical value of that data diminishes. Standardisation is not just a reporting issue; it is a market efficiency issue. This mirrors CFA Institute’s findings on gaps in consistency and comparability, with Sebi’s recent push for consolidated and sector-specific disclosures signalling a clear move towards more standardised, decision-useful reporting.

A second challenge is the growing demand for forward-looking disclosures. Most reporting today is retrospective. While historical data is valuable, investors are increasingly focussed on the future. They want visibility into transition plans, resilience strategies, management’s approach to navigating a rapidly changing operating environment. Businesses that can clearly articulate how they intend to manage transition-related challenges, particularly climate risks, will stand out to investors.

Third, we must bridge the gap between sustainability metrics and financial outcomes. For many investors, sustainability disclosures are viewed primarily as a risk-management tool. But their potential is far greater. Investors want to understand how investments in resource efficiency affect operating margins, or how supply chain sustainability measures reduce financial volatility. Connecting sustainability initiatives to the bottom line is the key to unlocking BRSR’s relevance for mainstream investors.

Finally, there is a need for greater sector-specific guidance. Material sustainability issues vary wildly between a software company and a cement manufacturer. Disclosures are most useful when they capture the specific risks and opportunities relevant to a company’s unique operating environment.

The road ahead

India has built a comprehensive sustainability disclosure ecosystem at an impressive pace. The BRSR framework has expanded data availability and created a strong foundation for integrating sustainability into mainstream business and investment decisions.

However, the next phase of progress will not be measured by the volume of data companies publish. It will be measured by quality, consistency, and financial materiality. By enhancing comparability, strengthening forward-looking transition disclosures, and linking sustainability to financial performance, the next BRSR can reach its full potential.

Ultimately, the success of India’s sustainability reporting framework will be judged by how effectively it helps businesses manage risks, enables investors to allocate capital wisely, and support sustainable, long-term economic growth.

(The author is Senior Country Head, CFA Institute India. Views are personal.)