Carbon credits in India

Carbon Credits: An Overview

The idea of carbon credits, including the establishment of a market for such credits, has generated significant global attention in recent years. While this idea is not new, it has become especially important today to understand what such credits entail and how these can benefit businesses – given the worldwide momentum towards ESG-related goals.
Carbon market transactions involve the purchase of emission rights from entities which have the technical and/or economic ability to reduce emissions. India’s Carbon Credit Trading Scheme, 2023 defines a ‘carbon credit’ to mean a value assigned to a reduction, removal or avoidance of emitted greenhouse gases amounting to one metric ton of CO2 or its equivalent. Accordingly, certificates may be issued by the government under the newly amended Energy Conservation Act, 2001.
In regulated carbon markets, each registered/obligated entity may be allotted a certain number of credits. Those that produce fewer emissions than the number of credits issued by the government (or an authorized agency) may enjoy a surplus. Conversely, companies with older and/or less efficient operations may generate more emissions than their credit allocation. The latter category may then look to buy credits to balance their emissions, including on account of a regulatory mandate.
This exchange between buyers and sellers will establish the market price. If it is cheaper for an emitter to trade in, rather than control, emissions, they can buy credits. Those that find it feasible to reduce emissions at a cost less than the market price can sell. Emissions trading can thus transform the right to emit a pollutant into a tradable good and create economic incentives for reduction.


Navigating BRSR

Navigating BRSR: Concerns and Opportunities  

In February, SEBI released a consultation paper on disclosures, ratings, and investing related to ESG, pursuant to which an assurance-driven reporting regime based on key ESG attributes (“BRSR Core”) may be introduced soon.
BRSR Core is intended to represent a focused subset of the Business Responsibility and Sustainability Reporting (“BRSR”) framework, which SEBI had introduced in May 2021 as a voluntary disclosure regime in lieu of the erstwhile Business Responsibility Reporting (“BRR”) paradigm. The main motivation behind introducing the BRSR framework was to ensure quantitative, standardized disclosures on ESG-linked parameters. While until FY 21-22, the top 1,000 listed companies in India by market capitalization could make disclosures under this framework on a voluntary basis, such disclosures are compulsory from FY 22-23.
This article provides an overview of category-wise BRSR compliance requirements.  Further, it highlights some of the benefits and opportunities, along with potential legal risks, associated with such disclosures. The article also discusses some of the concerns and innovations related to the BRSR Core framework, including in light of SEBI’s proposals with respect to adjusting intensity ratios for country-level purchasing power parity and extending disclosure requirements to corporate supply chains.


Electric Vehicle Sector in India

E-Vroom! An Overview of the Electric Vehicle (EV) Sector in India

Over the last few years and months, several policies and laws related to electric vehicles (EV) have been introduced in India, spanning several discrete pivots, such as in respect of: (1) local manufacturing, (2) emissions and waste reduction, and (3) charging infrastructure and batteries. This note aims to highlight some of the key initiatives undertaken by the government in the Indian EV sector, along with existing concerns and future opportunities.


ESG in India

Indian Legal Regime for ESG

The need for addressing Environmental, Social and Governance (“ESG”) related aspects, has never had more prominence than now. There is growing recognition of the financial and economic impacts of ESG risks across the globe and the investors are increasingly relying on ESG as an important metric to guide their investment decisions. Internationally, regulators and enforcement agencies are taking greater cognizance of ESG related issues and a more stringent view of non-compliances or greenwashing by any business regarding their ESG credentials. The impact of climate change, requirement of good governance and protection of interest of various stakeholders are increasingly forming part of various formal and informal dialogues, particularly in the post COVID era. At the 2021 United Nations Climate Change Conference (“COP-26”) held in Glasgow, United Kingdom, India, along with 196 other countries made enhanced commitments towards mitigating the risks associated with climate change. The recent legal developments have demonstrated that the regulatory landscape for ESG in India has developed at a measured but regular pace and the Indian regulatory authorities are now catching up on the ESG trends that have been ongoing at a global level. With so much being said and done in relation to ESG on a day-to-day basis, it is sometimes difficult to focus on the real issue. This note aims to explain the concept of ESG and provides a brief overview of the Indian regulatory landscape in relation to ESG.