March 10, 2025
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In the modern corporate landscape, Environmental, Social, and Governance (ESG) criteria have become indispensable for evaluating a company’s sustainability and its impact on society. As stakeholders—ranging from investors to consumers—increasingly demand ethical and sustainable practices, companies face growing pressure to improve their ESG performance. This shift necessitates a strong governance framework, making the role of company secretaries more crucial than ever. Company secretaries are pivotal in embedding ESG principles into the corporate fabric, ensuring that companies comply with regulatory requirements and proactively engage in responsible business practices. Their expertise and oversight help companies navigate the complex landscape of ESG compliance, ultimately contributing to a more sustainable and ethical business model.
Understanding ESG Compliance
ESG compliance encompasses a broad spectrum of responsibilities, from ensuring environmental stewardship and social responsibility to maintaining robust governance practices. Company secretaries are pivotal in embedding these principles into the corporate ethos. They must ensure that the company adheres to relevant laws, regulations, and standards, and that it reports its ESG performance transparently and accurately.
Raining Disclosures & Framework
SEBI-mandated disclosure for listed entities in India 1
From FY 2023 –2024, the top 1000 listed entities (by market capitalization) shall make disclosures as per the updated BRSR format as part of their Annual Reports.
Listed entities shall mandatorily undertake reasonable assurance of the BRSR Core, as per the glide path specified in the following table:
| Financial Year | Applicability of BRSR Core to top-listed entities (by market capitalization) |
| 2023-24 | Top 150 listed entities |
| 2024-25 | Top 250 listed entities |
| 2025-26 | Top 500 listed entities |
| 2026-27 | Top 1000 listed entities |
Prevailing Challenges
Some common challenges faced by Company Secretaries while ESG reporting include lack of standardization, data collection and quality, evolving regulatory requirements, balancing materiality & stakeholder expectations, integrating ESG into corporate strategy, addressing green washing concerns and more.
The Role of Company Secretaries in ESG Compliance
ESG Reporting Preparation:
In-depth knowledge of ESG metrics is crucial for company secretaries. They must understand the specific metrics and indicators relevant to their company’s industry, including key performance indicators related to environmental impact, social responsibility, and governance practices. Company secretaries also oversee data collection and verification processes, collaborating with various departments to ensure accurate data gathering. They work to integrate this data into a standardized format for comprehensive reporting. Their role is pivotal in ensuring that ESG reports are precise, transparent, and reflect the company’s true performance, thus fostering stakeholder trust and credibility.
Ensuring Accuracy and Transparency:
Company secretaries play a pivotal role in ensuring the accuracy, reliability, and consistency of ESG data through rigorous validation processes and internal audits. Transparency is a cornerstone of their work, requiring them to present both the positive and negative aspects of the company’s ESG performance. They align ESG reports with globally recognized standards and frameworks such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-related Financial Disclosures (TCFD). By doing so, they ensure that the reports are accurate and meet international benchmarks, thereby enhancing the credibility and trustworthiness of the company’s ESG disclosures.
Compliance with Reporting Requirements:
Company secretaries remain well-informed about the evolving ESG reporting regulations in all jurisdictions where the company operates. They meticulously plan and coordinate the entire reporting process to ensure that all data is accurately compiled and submitted within the deadlines set by regulatory authorities. Their diligence ensures that the company meets its legal obligations and demonstrates a commitment to transparency and accountability in its ESG practices. Through their efforts, company secretaries play a vital role in maintaining the company’s compliance and upholding its reputation for ethical governance.
Stakeholder Engagement:
Acting as liaisons, company secretaries effectively communicate the company’s ESG performance, initiatives, and goals to various stakeholders, including investors, regulators, customers, suppliers, and the public. They handle inquiries and requests for information with transparency and accountability, addressing questions from shareholders and ESG rating agencies alike. Through these interactions, company secretaries reinforce the company’s commitment to ethical practices and sustainability, fostering trust and confidence among all stakeholders.
ESG Report Publication
Company secretaries play a crucial role in managing the distribution and publication of Environmental, Social, and Governance (ESG) reports. They ensure that these reports are disseminated effectively across various platforms, such as the company’s website, regulatory filings, and industry-specific channels. This includes overseeing the accessibility of these reports, ensuring they comply with accessibility standards, and providing clear links on the company’s website for easy access.
Moreover, company secretaries are responsible for ensuring that ESG reports are accessible and comprehensible to stakeholders. They present the company’s ESG performance clearly and transparently, making it easy for interested parties to understand the company’s efforts and achievements in these areas.
By facilitating transparent and efficient dissemination of ESG information, company secretaries contribute significantly to enhancing its transparency and accountability regarding its environmental, social, and governance practices. Their efforts ensure that stakeholders, including investors, regulatory bodies, and the public, access accurate and relevant ESG data, thereby promoting trust and confidence in the company’s sustainability initiatives.
Internal Co-ordination
Company Secretaries (CS) play a crucial role in internal coordination. They collaborate with departments such as legal, finance, sustainability, and communications to gather and analyze ESG (Environmental, Social, and Governance) data and insights. They also engage directly with the Board of Directors, ensuring they grasp the importance of ESG performance in driving long-term value creation and managing risks effectively.
CS has a multifaceted responsibility in crafting accurate, transparent, and compliant ESG reports that offer meaningful insights to stakeholders. They serve as intermediaries between the company and regulatory bodies, guaranteeing adherence to ESG reporting standards. Their duties are pivotal in showcasing the company’s dedication to ESG principles, fostering transparency, and establishing trust with investors, regulators, and the public.
Governance and Risk Management
Company secretaries are indispensable to the governance framework of an organization, particularly in the realm of Environmental, Social, and Governance (ESG) considerations. They ensure that the board of directors and its committees are comprehensively informed about ESG-related risks and opportunities, fostering informed decision-making at the highest levels of corporate leadership. They facilitate ESG integration, ensure informed decision-making, and reflect ESG in Board Decisions.
Creating Sustainable Value:
Beyond compliance, company secretaries are pivotal in creating sustainable value for all stakeholders, including shareholders, employees, customers, and the broader community. They work to align the company’s ESG goals with its overall business strategy, driving initiatives that promote environmental stewardship, social responsibility, and robust governance practices. This alignment enhances the company’s reputation and stakeholder trust and contributes to its financial performance and competitive advantage.
Building Resilient and Forward-Thinking Organizations:
By championing ESG initiatives, company secretaries help build resilient, responsible, and forward-thinking organizations. They support the board in understanding and addressing ESG risks and opportunities, facilitating informed decision-making that balances short-term performance with long-term sustainability. This involves fostering collaboration across departments, engaging with stakeholders, and ensuring that the company’s ESG strategy is coherent and effectively implemented.
Fostering Innovation and Adaptability:
In a rapidly changing business environment, the ability to innovate and adapt is crucial. Company secretaries encourage the adoption of innovative practices and technologies that support ESG goals, such as renewable energy, waste reduction, and inclusive workplace policies. They also help the organization navigate the complexities of global supply chains, regulatory landscapes, and market expectations, positioning it to thrive in a sustainable future.
Conclusion
The role of company secretaries in ESG compliance is vital and increasingly integral to the success of modern businesses. By driving ESG initiatives and ensuring regulatory compliance, they help create sustainable value, build resilient organizations, and champion responsible business practices that benefit all stakeholders.
This article has been published on Taxmann. The link for the same.