However, an important limitation still remains. Most reporting frameworks continue to focus more on what companies report rather than what their actions actually achieve. As a result, there is often a gap between disclosed activity and measurable long-term impact.

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Current Limitation of ESG Reporting

In practice, sustainability reporting remains largely disclosure-oriented. Companies frequently report activities such as renewable energy adoption, waste management initiatives, diversity policies, or community development programmes. While such disclosures provide useful information, they do not always indicate whether meaningful or lasting change has occurred.

This happens because impact is inherently more difficult to measure than activity. Activities can be quantified immediately through expenditure figures, participation numbers, or operational metrics. Impact, on the other hand, often develops gradually and may depend on multiple external economic, social, and regulatory factors.

As a result, many sustainability reports continue to emphasise outputs rather than outcomes.

What Needs to Evolve

For ESG reporting to become more meaningful, there may need to be a gradual shift from activity-based disclosure towards outcome-oriented evaluation.

This could involve:

• Greater emphasis on measurable long-term results rather than short-term activities

• Improved standardisation of sustainability metrics across industries

• Stronger assurance and verification mechanisms

• Better integration of sustainability data within internal reporting systems

Such changes could improve comparability and help stakeholders assess whether reported initiatives are creating genuine impact.

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Practical Direction

A more impact-oriented reporting approach would require organisations to move beyond simply stating what initiatives were undertaken. Greater importance may need to be placed on tracking how such initiatives influence environmental and social outcomes over time.

For example, instead of only reporting the number of individuals trained under a skill development programme, companies may increasingly be expected to assess how many participants secured employment and whether such outcomes remained sustainable over a longer period.

This would strengthen the relationship between reported disclosures and actual performance.

Challenges in Transition

Despite these possibilities, transitioning towards impact-based reporting remains complex.

One major challenge is the cost and operational difficulty associated with long-term data collection and verification. Many forms of social and environmental impact cannot be measured immediately and may take years to become observable.

Additionally, the absence of universally accepted measurement standards creates inconsistency across industries and reporting frameworks. This makes comparison difficult and limits the reliability of impact evaluation.

As a result, achieving fully standardised impact reporting may remain a gradual and evolving process.

Concluding Perspective

ESG reporting frameworks have significantly improved transparency in corporate disclosures. However, transparency alone may not be sufficient to evaluate whether meaningful sustainability outcomes are actually being achieved.

The future effectiveness of ESG reporting may therefore depend not only on the quantity of disclosures, but on the extent to which reporting frameworks evolve from documenting activities towards assessing measurable long-term impact.

This article examines CSR initiatives from a commerce and compliance perspective. It does not assess medical, social, or public health effectiveness.

-By Shatakshi

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What is Greenwashing?

Greenwashing refers to a situation where a company presents an image of being environmentally or socially responsible without a corresponding level of actual impact.

It typically involves emphasising limited positive actions while broader operational practices remain unchanged, creating a perception of sustainability that may not fully reflect reality.

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How it happens?

Greenwashing typically occurs when a company highlights limited positive actions while overlooking or underreporting areas of significant negative impact.

This often takes the form of selective disclosure, where only favourable information is presented, creating an incomplete picture of overall performance.

Companies may also rely on the frequent use of broad terms such as “sustainable” or “eco-friendly” without clearly substantiating these claims through measurable data or verifiable outcomes.

Scope for Greenwashing in Reporting Frameworks

The possibility of greenwashing becomes more evident when sustainability disclosures are viewed within existing reporting structures. Since most disclosures are selective and company-driven, organisations may highlight positive initiatives while underreporting areas of significant negative impact.

In some cases, there may be a disconnect between what is stated in sustainability reports and the company’s actual practices, leading to a gap between communicated intent and operational reality.

Additionally, the use of broad terms such as “eco-friendly” or “sustainable” without adequate supporting data can create impressions that are difficult to verify. Companies may also emphasise a single positive attribute while overlooking larger environmental or social concerns, resulting in an incomplete representation of overall impact.

Practical Illustration

Consider a company that undertakes a plantation drive as part of its CSR initiatives and promotes the campaign extensively, highlighting its contribution to environmental sustainability.

However, at the same time, the company’s core operations continue to generate significant levels of pollution. While the reported initiative creates a positive perception, it does not fully reflect the overall environmental impact of the organisation.

Why it matters?

Greenwashing can create a gap between how a company presents itself and its actual performance. Investors and other stakeholders rely heavily on sustainability disclosures to make informed decisions.

If such information is selective or misleading, it may result in an inaccurate assessment of the company’s practices and risks. Over time, this can weaken trust in corporate disclosures and reduce the overall credibility of sustainability reporting frameworks.

Conclusion

Greenwashing does not always involve false reporting, but often arises from selective emphasis. In the absence of strong verification and standardisation, the distinction between genuine sustainability and communicated sustainability can become blurred.

This article examines CSR initiatives from a commerce and compliance perspective. It does not assess medical, social, or public health effectiveness.

-By Shatakshi

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Nature of ESG Disclosures

Sustainability disclosures are largely based on data collected internally by companies. This includes:

• Environmental data such as energy usage, emissions, and waste

• Social indicators like employee welfare, diversity, and safety

• Governance-related information such as policies, ethics, and risk controls

Unlike financial statements, which follow established accounting standards and are subject to strict audit procedures, ESG disclosures involve a mix of numbers and descriptive information.

This creates a challenge. While numbers can be checked more easily, qualitative disclosures — such as policy effectiveness or ethical practices — are more difficult to measure and verify objectively.

What is Assurance?

Assurance refers to the process of independent verification by a third party. In simple terms, it is an attempt to check whether the information reported by a company is accurate, complete, and fairly presented.

In financial reporting, audits provide a high level of assurance. In sustainability reporting, assurance is still evolving and is often limited in scope.

This is because ESG data is:

• More diverse

• Less standardized

• Often dependent on internal estimation methods

As a result, assurance in this area involves more judgement compared to traditional financial audits.

Current Position in India

In India, structured sustainability reporting has been strengthened through BRSR for certain listed companies. However, assurance of these disclosures is not uniformly required or standardized.

Some companies voluntarily obtain third-party assurance for selected ESG metrics, while others rely entirely on internal reporting systems. Even where assurance exists, it may not cover all aspects of the report.

This leads to variation in the reliability of disclosures across companies.

Practical Illustration

Consider a company that reports a reduction in carbon emissions over a financial year. The report may include detailed figures and explain the steps taken to achieve this reduction.

However, questions may still remain:

• How was the data collected?

• Were the measurement methods consistent?

• Was the reduction due to actual efficiency improvements or external factors?

Without independent verification, it becomes difficult to fully assess the accuracy and significance of such claims.

Key Challenges in Assurance

There are several structural challenges in ensuring reliable sustainability reporting:

• Lack of standardized metrics across industries

• Dependence on internal data systems, which may vary in quality

• Presence of qualitative information, which is difficult to verify objectively

• Higher cost and complexity of comprehensive assurance

These factors make it difficult to apply a uniform assurance approach across all companies.

Why It Matters

Sustainability disclosures are increasingly used by investors, regulators, and other stakeholders to evaluate corporate behaviour and long-term risk.

If the underlying data is not reliable, it can lead to:

• Misinformed investment decisions

• Overestimation of sustainability performance

• Reduced trust in reporting frameworks

In such cases, reporting becomes more about presentation than actual performance.

Concluding Perspective

Sustainability reporting frameworks such as BRSR represent an important step towards greater transparency. However, transparency alone does not ensure reliability.

The effectiveness of these frameworks ultimately depends on the strength and consistency of assurance mechanisms. Without credible verification, the gap between what is reported and what actually exists may continue to persist.

This article examines CSR initiatives from a commerce and compliance perspective. It does not assess medical, social, or public health effectiveness.

-By Shatakshi

BRSR: A Structured Disclosure Framework

The Business Responsibility and Sustainability Report (BRSR) has been introduced by the Securities and Exchange Board of India (SEBI) for the top listed companies in India. It replaces the earlier Business Responsibility Report (BRR) and expands the scope of disclosure to include detailed sustainability-related metrics.

The objective of BRSR is to standardize how companies report on environmental, social, and governance parameters, thereby improving comparability, transparency, and consistency in disclosures.

Structure of BRSR

BRSR is organized into three broad sections, each serving a distinct reporting purpose.

Section A – General Disclosures
This section captures basic information about the company, including its operations, scale, workforce composition, and overall business profile. It provides context necessary to interpret the disclosures that follow.

Section B – Management and Process Disclosures
This section focuses on policies, governance structures, and internal processes. Companies disclose whether they have formal policies relating to sustainability, risk management mechanisms, and board-level oversight of ESG-related matters.

Section C – Principle-wise Performance Disclosures
This is the most detailed section, where companies report performance against specific sustainability principles. It includes both qualitative and quantitative disclosures across environmental, social, and governance dimensions.

What BRSR Measures

BRSR primarily captures three types of information:

• Quantitative metrics such as energy consumption, water usage, emissions, and workforce data.

• Policy disclosures indicating the existence of formal frameworks on ethics, sustainability, and employee welfare

• Process indicators reflecting how governance and risk management systems are implemented

These disclosures enable stakeholders to assess how companies structure their sustainability practices and integrate them into operations.

Practical Illustration

Consider a company reporting under BRSR that discloses a reduction in energy consumption over the financial year, along with details of renewable energy usage and waste management practices. It may also report policies on employee well-being and governance mechanisms for ethical conduct.

While these disclosures provide visibility into the company’s operational practices and policy framework, they do not necessarily indicate the long-term environmental or social impact of such measures. The reporting captures performance indicators, but not the full extent of outcomes.

Structural Limitation

BRSR strengthens transparency by standardizing ESG disclosures. However, like most reporting frameworks, it is fundamentally disclosure-oriented.

The framework answers:
What is being reported?
But it does not fully answer:
What has actually changed?

As a result, there remains a distinction between reported performance and realised impact. The presence of detailed metrics improves comparability, but does not eliminate challenges related to outcome measurement, attribution, or long-term evaluation.

Concluding Perspective

BRSR represents a significant step towards formalizing sustainability reporting in India. It enhances consistency and enables stakeholders to make more informed assessments of corporate conduct.

However, disclosure should not be conflated with impact. The effectiveness of such frameworks ultimately depends on how the reported data is interpreted, evaluated, and integrated into decision-making by regulators, investors, and other stakeholders.

This article examines CSR initiatives from a commerce and compliance perspective. It does not assess medical, social, or public health effectiveness

-By Shatakshi

CSR: A Statutory Obligation in India

Under Section 135 of the Companies Act, 2013, qualifying companies are required to spend at least 2% of their average net profits on activities specified under Schedule VII. The framework is compliance-driven and subject to board-level oversight through a designated CSR Committee.

CSR in India is therefore expenditure-oriented. The law mandates spending and disclosure to ensure that profitable enterprises contribute to social development. However, the regulatory focus remains largely on allocation and reporting of funds rather than structured evaluation of long-term impact.

ESG: A Market-Driven Evaluation Framework

Unlike CSR, ESG is not anchored to a statutory spending requirement. Instead, it functions as a performance-based evaluation framework through which investors, regulators, and financial institutions assess how responsibly and sustainably a company operates.

In the Indian context, sustainability disclosures have gained regulatory significance for listed entities. ESG evaluation typically encompasses environmental risk management, governance standards, stakeholder policies, transparency practices, and long-term sustainability indicators.

While CSR primarily addresses outward social contribution, ESG evaluates the internal quality of corporate conduct.

The Structural Distinction

The difference between CSR and ESG lies in orientation and scope.

CSR answers the question: How much is the company contributing?
ESG addresses: How responsibly is the company operating?

CSR is expenditure-based and compliance-focused. ESG is performance-based and market-evaluated.

A company may fully comply with CSR spending requirements yet still demonstrate weak environmental controls or governance deficiencies. Conversely, an organisation with strong ESG practices may integrate sustainability into its risk management, operations, and strategic decision-making beyond statutory mandates.

Practical Illustration

Consider a manufacturing company that spends ₹10 crore under CSR on rural education initiatives in full compliance with statutory requirements. The expenditure is properly disclosed and satisfies the prescribed 2% obligation.

However, the same company may simultaneously face environmental compliance issues, weak board oversight, or inadequate transparency in risk reporting. In such a case, CSR obligations are met, but ESG performance remains questionable.

The distinction becomes evident: CSR measures contribution, whereas ESG evaluates conduct and sustainability of operations.

Concluding Perspective

CSR reflects statutory responsibility. ESG reflects strategic sustainability and market accountability.

Understanding this distinction is essential in contemporary corporate governance, where regulatory compliance alone does not determine long-term credibility or investor confidence.

This article examines CSR initiatives from a commerce and compliance perspective. It does not assess medical, social, or public health effectiveness.

-By Shatakshi

This provision ensures that CSR spending is compliance-driven and quantifiable in monetary terms. However, while the law clearly mandates spending, it does not prescribe a uniform framework for measuring impact. As a result, CSR reporting often priorities expenditure and activities over outcomes, creating a structural gap between what is reported and what can actually be evaluated.

In practice, companies tend to focus on outputs rather than outcomes. Outputs refer to activities undertaken — such as workshops conducted, individuals trained, or campaigns launched. These are immediate, easily quantifiable, and largely within the company’s control. Outcomes, by contrast, reflect what actually changes as a result of these activities and are more complex to assess, often requiring observation over time and consideration of external factors.

From a reporting perspective, activity-based disclosure frequently becomes the default due to several structural constraints. Meaningful social outcomes may take years to materialize, making them difficult to track within standard reporting cycles. Attribution also poses a challenge, as isolating the impact of a single CSR initiative from broader social or economic influences is rarely straightforward. In the absence of standardized impact metrics, companies tend to rely on quantitative inputs that are easier to verify.

Let’s say: -

A CSR report may state that a skills training program reached 5,000 individuals. While the figure appears significant, it does not clarify how many participants completed the program, how many secured job or over what time period these outcomes were assessed. Without such context, the number remains an activity count rather than an indicator of impact.

From a commerce perspective, the gap between CSR spending and measurable impact is not primarily a question of intent, but of structure. Until reporting frameworks place greater emphasis on outcome measurement, CSR disclosures will continue to reflect what was done more clearly than what actually changed.

This article examines CSR initiatives from a commerce and compliance perspective. It does not assess medical, social, or public health effectiveness.

-By Shatakshi

CSR reporting frequently relies on large, cumulative numbers — beneficiaries reached, professionals trained, campaigns launched. These figures look impressive but are often ambiguous. It is not always clear whether they represent annual activity, multi-year aggregation, or one-time interventions. As a result, comparison and evaluation become difficult.

For Instance: -

Consider a CSR report that states: “10,000 beneficiaries were reached through a health awareness program.”
At first glance, this appears impactful. However, the statement does not clarify whether these beneficiaries attended a training session, received medical treatment, watched an awareness video, or were counted through online impressions. It also does not specify whether the figure relates to one year or multiple years combined.

From a commerce perspective, the issue here is not intent, but clarity. Without a clear definition of what “reached” means, the number becomes difficult to evaluate, audit, or compare.

What tends to receive less attention is structure. Does the expenditure clearly qualify under Schedule VII? Is the spending directed toward execution or communication? Are outcomes measured, or are activities reported as proxies for impact? These are not moral questions. They are accounting and disclosure questions.

The gap between CSR reporting and CSR reality exists partly because CSR disclosures are compliance-driven. Companies are required to spend and report, but outcome measurement is not uniformly mandated. Measuring long-term social outcomes is complex and resource-intensive. Narrative reporting, on the other hand, is immediate, controllable, and visible.

This does not imply bad intent. It highlights a structural limitation in how CSR is currently communicated. When narratives dominate disclosures, evaluation becomes subjective rather than analytical.

For anyone reading CSR reports through a commerce lens, the takeaway is straightforward: meaningful CSR assessment begins where storytelling ends — with clear classification, consistency, and disciplined disclosure.

This article examines CSR initiatives from a commerce and compliance perspective. It does not assess medical, social, or public health effectiveness.

-By Shatakshi