Inside the half-truths of corporate India’s sustainability claims

By Debanjali Biswas, Sandeep Khurana

Sebi’s transparency drive is thwarted by companies’ knack for hiding bad news in BRSR reports, all while
they navigate a shoddily built framework and no real oversight.
On an Indigo (Interglobe Aviation) flight, as passengers enjoy their snacks, few think about the plastic
waste piling up around them. Indigo, for its part, is also indifferent, arguing that it is “not a manufacturing
company”, so the trash isn’t its responsibility. Then there is Maruti Suzuki, the country’s top automaker,
rolling out cars loaded with plastic components. Yet, “plastic” was conspicuously absent when the
company reported about its recycled and reused input material. These aren’t minor oversights; they are
checking the environmental-responsibility box while keeping the messier details off-stage. And it’s not
just Indigo or Maruti. Indian companies across the board are becoming adept at circumventing
sustainability rules.
The rules were laid so that companies can be accountable for their environmental impact. The Securities
and Exchange Board of India (Sebi) in 2021 said the top 1,000 Indian companies must file sustainability
reports as part of its Business Responsibility and Sustainability Reporting (BRSR) framework.
The plan: sky-high; the execution: barely off the tarmac.
The Ken, with independent researcher Sandeep Khurana, took a closer look at the environmental
disclosures in BRSR filings from a handful of companies across sectors nine in total and found that even
pharma giants like Sun Pharmaceuticals and pizza chain Domino’s franchisee Jubilant Foodworks have
found a way of showing sustainability without real accountability.
Most of them did not respond to The Ken’s detailed questionnaire. It all started in the fiscal year 2023,
when BRSR reporting became mandatory, and companies scrambled to comply, resulting in a spectacular
mess of reports. Some offered detailed metrics; others provided barely legible narratives, sometimes just
a paragraph that barely scratched the surface of their environmental practices. Sebi also deserves a share
of the blame. Vipul Arora, ESG consultant and partner at advisory firm Sattva, questions the shortage of
trained professionals and lack of dedicated roles for overseeing ESG practices at majority of the companies
that report. On top of that, the BRSR guidelines themselves are murky. Sure, after some public shaming by
the Centre for Science and Environment (CSE), companies have upped their reporting game for the 2023–24 cycle.
In reality, they’ve just gotten better at polishing their numbers and glossing over the truth. Now, “greenwashing
can be both intentional and unintentional,” said Arora. But either way, the end result is the same: it
misleads stakeholders investors, consumers, regulators into believing a company is more sustainable than
it actually is.
Quiet regulation-Sebi Chief Madhabi Puri Buch, during the Global Fintech Fest in Mumbai in August,
said compliance should be a “low hum in the background” to ease the burden on businesses
The broken promise of BRSR
As the owner of its in-flight food and beverage products, Indigo is on the hook for dealing with plastic
waste, according to the Extended Producer Responsibility (EPR) framework. Indigo is likely operating
under the impression that it can sidestep fulfilling its obligations under the framework by virtue of not
actually manufacturing the plastic it uses. But in reality, the EPR framework doesn’t absolve “brand
owners” like Indigo from responsibility for managing waste. This situation, however, is not surprising.
Sebi’s BRSR promised to revolutionize corporate India’s environmental, social, and governance (ESG)
transparency. It saw a brave new world where companies would dutifully disclose both qualitative and quantitative
data on their sustainability efforts. With 140 questions, 98 mandatory and 42 voluntary BRSR was designed to cover
all bases.
But, while grand in scope, the BRSR missed a crucial point regarding execution: the market regulator
didn’t build up the infrastructure needed to validate companies’ claims.
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12 Sep 2024 /12 min read
While BRSR was modelled on national guidelines and global benchmarks, it came at the expense of essential
groundwork.
“BRSR has been customized to be more pertinent to India, by including metrics like sourcing from MSMEs and
CSR projects’ beneficiaries. It retains metrics relevant for global stakeholders”- Anand Krishnamurthy, co-founder
of ESG-services firm Event.
But the framework is ripe for exploitation starting with who verifies companies’ claims. Consultancy firms, such as
KPMG and PwC, are tasked to be assurance providers verifying parts of the BRSR reports but leaving the
“voluntary” sections wide open for interpretation. And that’s why Indigo is just one example in a sea of vague non-
disclosures and exaggerated claims presented as fact.
A pattern of greenwashing
Take Maruti Suzuki, for instance. The automaker cranks out over 2 million cars annually, and a substantial portion
of each vehicle is essentially a plastic feast dashboards, bumpers, door panels, you name it. But in its BRSR, Maruti
barely mentions plastic. Instead, it touts its use of recycled metals and scrap, each of which makes up less than 10%
of its total materials. One would think plastic would get at least a footnote. And Maruti Suzuki isn’t isolated in this
selective reporting.

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Consider Sun Pharmaceutical’s BRSR report. It mentions that its manufacturing plant in Maduranthakam,
Tamil Nadu, is located just 3.7 km from the ecologically sensitive Vedanthangal Bird Sanctuary. On the
BRSR question of whether proximity impacts local biodiversity, Sun Pharma confidently responds, “No
significant direct or indirect impact on the environment.”
What Sun Pharma glaringly omits is its ongoing legal tussle in the National Green Tribunal (NGT) over
severe environmental violations at this facility. Since May 2022, Sun Pharma has been fighting the case;
it also faced a Rs 10 crore penalty for breaching environmental clearance conditions though the Madras
High Court has stayed the order.
So, how do these gaps escape Sebi’s scrutiny?

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Verification: both crucial and difficult to achieve
The problem lies with the regulator’s assurance process. Although the BRSR framework was conceived
with lofty ideals, its safeguards are more leaky than a sieve. For instance, electrical-equipment maker
Havells’ 2023 BRSR report carried PwC’s assurance about the company’s various waste-management
metrics. But metrics like “waste-related impact” and “management of the impact” that were part of PwC’s
earlier assurance were no longer present in the FY24 report. This selective pruning of assurance is a
textbook example of how companies manage to slip under the radar. “We have no way to know if
companies are accidentally misreporting or purposely greenwashing. Scrutinizing and verifying this data
is the only way to find out,” said Nivit Yadav, programme director at CSE. And therein lies the crux of the
problem. The structure of Sebi’s BRSR disclosures practically invites these discrepancies.
Every BRSR asks for metrics that fall under Core, Essential, and Leadership indicators. Core KPIs require
third-party assurance think KPMG or PwC and companies are expected to back up their data with in-depth
checks, site visits, and supply-chain verifications. But the other indicators don’t carry the same obligations,
explained Nitesh Mehrotra, partner (sustainability and ESG) at EY. All of this creates a massive loophole:
companies can cherry-pick which data they want to be assured by a consultant and which data they’d
rather sweep under the rug under the guise of non-core indicators.
An ESG consultant from KPMG said companies often avoid assurance for metrics “they aren’t confident
about”. Maybe the data is too qualitative to pin down, or maybe there’s something they don’t want auditors
to dig into. Either way, the flexibility in the assurance process weakens the entire system. So, when metrics
quietly slip out of scope like in Havells’ case it raises serious questions.
In The Ken’s analysis of BRSR reports, only one misreported indicator fell under the Core KPIs. The rest
were in the Essential or Leadership categories, where assurance is optional. This speaks volumes about
how easily companies can evade accountability and the systemic flaws in Sebi’s enforcement of the
framework.
Now, Sebi did plan to toughen up the requirements for Core KPIs, mandating assurance for FY24 onward.
But that plan is already on the chopping block now. Instead of sticking to its guns, the regulator is
considering replacing “assurance” with something much squishier “assessments”. This change is due to
capacity issues at both Sebi and assurance providers, Arora added.
A regulator’s sudden U-turn
What’s worse is that there is a lack of clarity on how Sebi will define “assessment” and how its definition
will differ from “assurance”, said the KPMG consultant. So, no one can really prepare for it. “It is two
steps forward, one step back,” said Arora. Embedding sustainability from the design stage is cheaper and
more effective than retrofitting it later, he said, critiquing the BRSR rollout. In fact, he believes India
needs an ESG framework tailored to its context, focusing on meaningful measures rather than imported
KPIs. Apart from third-party assurance, Sebi should scrutinize reports in some way. This capacity should
be developed either within Sebi itself or by delegating it to other agencies.”-Shobhit Srivastava,
programme manager, CSE.
The ambiguity in BRSR doesn’t stop with its assurance process. The lack of standardised definitions is
another glaring flaw. As the KPMG consultant noted, “When you start going into the nuances of
definitions, each company has different things it qualifies under those metrics.”
Take Jubilant Foodworks, for example. In its report, the company claimed to have implemented Zero
Liquid Discharge (ZLD)a water-treatment process in some of its facilities. But it didn’t specify which
facilities or how many. The BRSR asks companies to provide details about “coverage and
implementation,” but Jubilant’s report is silent on the specifics.
When The Ken followed up, Jubilant admitted that ZLD was only implemented in two facilities but
insisted that the report didn’t explicitly ask for those details. This kind of ambiguity is where greenwashing
can sneak in.
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Playing with fire
The BRSR may be the new playground for corporate-sustainability claims, but it’s also where companies’
claims will be challenged. With publicly available data, it’s not just investors who are eyeing the reports.
Competitors, policymakers, and rating agencies are also keenly watching. Foreign investors, as Yadav and
Srivastava of CSE put it, are likely to gravitate toward companies that seem to care about the environment.
They will dig into manufacturing processes and sustainability practices before pouring in precious dollars.
And the timing is impeccable or disastrous, depending on how truthful a company’s ESG metrics are.
With COP 29, the United Nations Climate Change Conference, looming in 2024, India is set to reaffirm
its commitment to sustainable development.
So, greenwashing has moved on from a mere reputational risk to a full-blown liability. And the push for
transparency isn’t going to come from some grand regulatory mandate, it needs to come from within the
companies themselves. Mehrotra suggests beefing up internal audit teams for ESG reporting. But he
added, “The quality of data is as good as the process.” Another red flag is the talent running these ESG
shows. Instead of hiring actual experts, many companies are just pulling people from other departments,
usually CSR to handle BRSR reporting, multiple people in the industry told The Ken.
Unsurprisingly, this often leads to some seriously flawed metrics. “These [gaps] will translate into risks,”
Arora pointed out bluntly, adding that global firms like aeroplane maker Boeing have tanked their
shareholder value by neglecting robust ESG strategies. The danger lies in companies thinking that, by just
reporting, their job is done. This distracts from real action on the ground. BRSR needs to evolve to account
for those more robustly…”- Vipul Arora, Partner (ESG and climate solutions), Sattva.
Srivastava and Yadav propose a sensible fix: Sebi should tie up with other bodies, like pollution control
boards, to create a unified system of checks and balances. Currently, there’s too much room for companies
to polish their image on paper while their real practices go unexamined.
With tightened scrutiny and streamlined processes, the BRSR could transform into a genuine tool for
measuring sustainability. Until that happens, companies like Indigo and Maruti Suzuki will keep cruising
with plausible deniability, hoping nobody looks too closely under the hood.
Other information
1. Competency to be checked for- Delivering Results and Meeting Customer Expectations
Delivering Results and Meeting Customer Expectations- Focuses on customer needs and
satisfaction; sets high standards for quality and quantity; monitors and maintains quality and
productivity; works in a systematic, methodical and orderly way; consistently achieves project goals.
2. Certain set of activities that may be conducted for determining this competency- Separate sheet
is circulated to faculty colleagues.

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12 Sep 2024 /12 min read