Nine ESG terms that carry law, and how boards misuse them

Most ESG terms in an Indian board paper have a legal owner. The BRSR is a format prescribed under regulation 34(2)(f) of SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations¹. A carbon credit certificate exists because the Carbon Credit Trading Scheme, 2023 created it under the Energy Conservation Act, 2001². In the words of The India ESG Lexicon: "A word used loosely in a board paper, a policy or a report can therefore misstate a legal position".

Several such terms changed meaning or governing instrument between March 2025 and September 2026. Below are nine that recur in board minutes, CSR proposals and departmental notes, each stated against its instrument.

Disclosure words

BRSR and BRSR Core. The BRSR is the whole report the top 1,000 listed entities by market capitalisation include in their annual report, and the accuracy duties of regulation 4(1) apply to every figure¹. It goes to the stock exchanges, in PDF and XBRL, on the same day as the annual report³. BRSR Core is, in SEBI's words, "a sub-set of the BRSR": indicators under nine ESG attributes that must be independently verified⁴. Its glide path governs verification alone, rising from the top 150 in FY 2023-24 to the top 1,000 in FY 2026-27^4,5.

Assessment or assurance. Minutes citing "reasonable assurance as mandated by SEBI" rest on a superseded text. The July 2023 framework required it⁶; SEBI's Board decided in December 2024 to replace it with "assessment or assurance"⁷, and the March 2025 circular and LODR amendment gave that effect^5,8. No level is prescribed⁴. An assessment follows the Industry Standards Forum's standards, mandatory from FY 2024-25⁹. An assurance engagement follows an assurance standard; SEBI's FAQs name ISAE 3000, ISSA 5000, SSAE 3000 and SAE 3410 as examples and mandate none¹⁰. An entity choosing assurance also chooses between limited and reasonable, and its BRSR must name the provider and the type of engagement⁵. The internal auditor may not act; the statutory auditor may, subject to independence¹⁰.

Materiality. Financial materiality asks how a matter affects the company's cash flows, position and prospects; impact materiality asks how the company affects people and the environment; double materiality is met if either test is. The European Sustainability Reporting Standards apply double materiality under the CSRD, and the revised ESRS, in a delegated act sent to the European Parliament and Council for scrutiny, are to apply to financial years beginning on or after 1 January 2027¹¹. India has not adopted the ISSB's standards¹². The BRSR's hook is Section A question 26: material responsible-business-conduct issues presenting a risk or an opportunity, the response, and the financial implications¹³. In the author's reading, it mixes both perspectives without using the term, so an Indian subsidiary of an EU group must document an impact assessment the BRSR does not require in that form.

Carbon words

Carbon credit certificate and green credit. These sit under different statutes. The certificate is the unit of the CCTS, notified in June 2023 under the Energy Conservation Act as amended in 2022². One certificate is one tonne of CO₂e: an obligated entity that beats its intensity target is issued certificates, and one that misses must buy and surrender them^14,15. A green credit arises under the Green Credit Rules, 2023, made under the Environment (Protection) Act, 1986. Plantation credits are issued only after at least five years of restoration and 40% canopy density, and since 29 August 2025 they are non-tradable and non-transferable except between a holding company and its subsidiaries; they may be exchanged against compensatory-afforestation obligations and are extinguished on use¹⁶. BRSR Principle 6 has a Leadership indicator on them⁵. A renewable energy certificate, representing one megawatt-hour, is a third instrument¹⁷.

Obligated entity. The term means an entity notified under the Greenhouse Gases Emission Intensity Target Rules, 2025 with a binding intensity target under the CCTS compliance mechanism¹⁴. Targets cover 282 entities in aluminium, cement, chlor-alkali and pulp and paper, notified in October 2025, and 208 in refining, petrochemicals, textiles and secondary aluminium, notified on 13 January 2026: 490 in all^14,18. Not every BRSR filer is obligated, and not every obligated entity is listed.

GEI target. A greenhouse-gas emission intensity target is set in tonnes of CO₂e per unit of product for a named obligated entity¹⁴, so output growth alone does not cause a breach. India's NDC is economy-wide and per unit of GDP: 45% lower emissions intensity by 2030 than in 2005¹⁹, and 47% by 2035 under the NDC approved on 25 March 2026²⁰. BRSR Core measures GHG intensity per rupee of turnover adjusted for purchasing power parity and per unit of output²¹. A mid-cap cement company can publish three intensity figures on different denominators; comparing them without saying so compares unlike things.

CBAM default value. CBAM is EU law with no Indian anchor; it reaches Indian producers through their buyers²². Defaults are Commission values, by country, good and year, for use where actual emissions have not been determined and verified. They assume the production route assigned to each country and carry a mark-up of 10% for 2026, 20% for 2027 and 30% from 2028 (1% for fertilisers)^23,24. Implementing Regulation (EU) 2026/1740 of 20 July 2026 corrected them with effect from 1 January 2026²⁵. Defaults are conservative by design, so an exporter with lower verified actual emissions can offer its EU buyer a direct saving. A related error concerns the CBAM factor, 97.5% in 2026 and zero in 2034, which is the free allocation EU producers still receive²⁶. Treating its complement as the chargeable share understates the cost: for a blast-furnace rebar, the author's worked calculation gives about €74 a tonne in 2026 against about €4^24,27.

CSR and labour words

Ongoing project. Section 135 lets only one kind of CSR shortfall stay with the company: an amount unspent on an ongoing project. It goes to an Unspent CSR Account within 30 days of the year-end and must be spent within three financial years. Every other shortfall goes to a Schedule VII fund within six months²⁸, which for FY 2025-26 means by 30 September 2026. In the author's reading, neither route is a carry-forward into next year's budget. Default costs the company twice the amount required to be transferred or ₹1 crore, whichever is less, and each officer in default one-tenth of it or ₹2 lakh, whichever is less²⁸; it has been a civil wrong since 22 January 2021²⁹. The CSR Rules cap an ongoing project at three years, excluding the year it began, though the book verified that rule text only through a secondary reproduction³⁰. Relabelling a one-year project "ongoing" on 31 March misuses a defined term.

Labour Codes. The four Codes took effect on 21 November 2025, rationalising 29 laws, with existing rules continuing during the transition³¹. Documents calling them "pending" are stale, and a FY 2025-26 report describes two regimes. They bring a uniform definition of wages, gig and platform workers, gratuity for fixed-term employees after one year, and inspector-cum-facilitators³¹. The Code on Wages (Central) Rules, 2026, G.S.R. 343(E) of 8 May 2026, supersede the Minimum Wages (Central) Rules, 1950³². In the author's reading, where a State is the appropriate Government, its own rules have to be read.

A drafting habit for FY 2026-27

Each error above has one cause: a regulated term used without its instrument, provision and date. A board paper or departmental note can tag each such term with the provision that gives it force, the date of the position, and its status: in force, transitional, notified but not yet applicable, draft or superseded.

The second habit is reconciliation. One plant's data can appear in a BRSR, a CCTS monitoring submission and a CBAM data sheet for an EU buyer. Form CSR-2 should agree with the annual report on CSR and with BRSR Section A question 24¹³. FY 2026-27 is the first year in which every entity in the top 1,000 needs an assessment or assurance of its BRSR Core⁴, which makes it the year to fix the vocabulary.

This note draws on The India ESG Lexicon: Terms, Laws and Filings for BRSR, CSR and Carbon Compliance (first edition, v1.1) by Harshal Kate, in preparation.

Analysis, not legal advice. Law stated as at 25 September 2026.