Beyond ESG Disclosures: What India and Sri Lanka Can Learn from Each Other
Dr.Ranjith Krishnan, Associate Professor, CHRIST University, Delhi NCR, India
The credibility of sustainability reporting is ultimately tested by its usefulness in corporate and financial decisions. A Sri Lankan tea exporter may disclose water consumption, while an Indian textile manufacturer reports greenhouse gas emissions. Yet a lender must also consider exposure to drought, the likely cost of adaptation and the reliability of the underlying figures. These questions provide a useful basis for examining the different reporting approaches adopted by India and Sri Lanka.
The Securities and Exchange Board of India (SEBI) requires Business Responsibility and Sustainability Reports (BRSR) from the country’s 1,000 largest listed entities by market capitalisation. Based on India’s National Guidelines on Responsible Business Conduct, BRSR addresses environmental performance, employee welfare, consumer responsibility and business conduct. SEBI subsequently introduced BRSR Core, comprising selected performance indicators, and has revised provisions concerning assessment, assurance and value-chain disclosures.
Sri Lanka has followed a different regulatory path. The Institute of Chartered Accountants of Sri Lanka issued SLFRS S1 and SLFRS S2, effective from 1 January 2025, based on standards developed by the International Sustainability Standards Board (ISSB). SLFRS S1 concerns sustainability-related risks and opportunities affecting an entity’s prospects; SLFRS S2 addresses climate-related disclosures. Domestic implementation rules determine their application to particular companies. The two national approaches are therefore comparable, but should not be treated as interchangeable.
Lessons for Sri Lanka from BRSR
BRSR’s contribution lies in its structured treatment of indicators that are frequently discussed in general terms but insufficiently measured. Energy consumption, water withdrawal, occupational injuries, employee benefits and complaints are capable of systematic disclosure. For Sri Lanka’s apparel, plantation and tourism industries, these matters have direct operational significance. Labour conditions can affect production continuity; inefficient water management may constrain output; inadequate grievance procedures can generate legal and commercial exposure.
An equally important lesson concerns the governance of underlying data. Where an apparel factory reports lower energy intensity, management should retain meter readings, production volumes, calculation methodologies and explanations for material variations. Sustainability information requires identifiable data owners, review procedures and an audit trail comparable to those used in financial reporting. Cost and management accountants can relate these indicators to production costs, capital budgeting and operational risk. Board oversight is weakened when reported figures cannot be substantiated.
Nevertheless, regulatory design must acknowledge differences in organisational capacity. Reporting obligations become costly where smaller suppliers lack trained personnel, information systems or dependable baseline data. A small tea processor and a listed conglomerate should not face identical demands. Phased implementation, proportionate verification and accessible professional training would be preferable to extensive questionnaires that generate little decision-useful evidence.
Lessons for India from Sri Lanka’s standards
Sri Lanka’s alignment with ISSB standards offers India a useful perspective on the relationship between sustainability and enterprise value. IFRS S1 addresses risks and opportunities capable of influencing an entity’s prospects. IFRS S2 places climate-related matters within governance, strategy, risk management, metrics and targets. This investor-oriented approach directs attention towards prospective financial consequences, complementing the historical indicators commonly disclosed by companies.
An industrial undertaking may record declining emissions while remaining materially exposed to coastal flooding. Investors must understand whether that exposure affects insurance expenditure, maintenance programmes, capital investment or projected cash flows. In plantation enterprises, altered rainfall patterns may influence yields, labour productivity and borrowing requirements. BRSR gives a wider account of responsible business conduct; the ISSB approach can strengthen the explanation of how material sustainability risks affect financial resilience. Indian companies could incorporate this discipline without relinquishing BRSR’s broader stakeholder indicators.
International standards assist this process, although their purposes differ. The Global Reporting Initiative (GRI) Standards examine an organisation’s impacts on the economy, environment and people. ISSB standards concentrate on information relevant to investors and other capital providers. The GHG Protocol establishes methods for accounting for direct, purchased-energy and value-chain emissions. International Standard on Sustainability Assurance (ISSA) 5000, issued by the International Auditing and Assurance Standards Board, provides requirements for sustainability assurance engagements. Their use requires methodological consistency; listing multiple frameworks does not establish reporting credibility.
Scope for bilateral cooperation
The bilateral commercial relationship gives this comparison practical relevance. Banks, shipping operators, manufacturers and exporters encounter sustainability-related information requirements across borders. A Sri Lankan supplier may receive inconsistent emissions or labour-data requests from different buyers. An Indian investor examining a Sri Lankan enterprise may find that local disclosures do not readily correspond with its reporting processes. Such duplication increases compliance expenditure without necessarily improving the quality of decisions.
Professional institutes, securities-market institutions and universities in both countries could undertake voluntary sectoral pilot projects, initially covering apparel, plantations and logistics. These initiatives could establish common definitions for selected indicators, demonstrate appropriate documentation and build smaller suppliers’ capacity for internal controls. They could also connect climate exposure with operating costs and investment appraisal. Such cooperation must respect domestic legal requirements and the distinct objectives of BRSR and SLFRS S1/S2.
Regulators should resist treating the volume of disclosed information as a measure of progress. Extensive reporting cannot compensate for unaddressed workplace risks or the absence of board consideration of climate-adaptation expenditure. Nor does reference to an international standard, by itself, establish measurement accuracy. A credible regime identifies relevant information, subjects it to proportionate scrutiny and encourages boards to use it in decision-making.
India’s experience illustrates the importance of measurable, wide-ranging performance indicators. Sri Lanka’s standards emphasise internationally comparable information concerning financially relevant sustainability risks. Each approach offers useful lessons, as well as implementation cautions. Ultimately, the quality of reporting should be judged by whether directors can explain the costs of material sustainability risks, the responses approved and the persons accountable. On that measure, the substance of corporate decisions matters more than the appearance of the published report.