Advanced Auditing, Assurance and Professional Ethics · Sustainable Development Goals (SDG) & Environment, Social and Governance (ESG) Assurance

ESG Concepts and Reporting Frameworks for CA Final Audit

Updated 5 October 2026 · Fact-checked

ESG means Environment, Social and Governance factors that show how an entity affects, and is affected by, people, the planet and its own management. ESG reporting discloses these through frameworks such as GRI, SASB, TCFD, IFRS S1/S2 and SEBI's BRSR. To answer, name the framework, its purpose, its audience and its link to assurance.

Understand ESG Concepts and Reporting Frameworks

ESG stands for Environment, Social and Governance. These are non-financial factors that affect an entity's long-term value and its impact on society.

Environment: climate change, emissions, energy, water, waste, biodiversity.
Social: employees, health and safety, human rights, diversity, supply chain, community and customers.
Governance: board structure, ethics, anti-corruption, transparency, risk management, shareholder rights.

ESG reporting is the disclosure of these matters, often with metrics and targets, so that investors and other stakeholders can judge risk and impact. Financial statements do not capture most of this, so separate frameworks exist.

The frameworks differ mainly in audience and in the idea of materiality. GRI (Global Reporting Initiative) serves a wide range of stakeholders and uses impact materiality: how the entity affects economy, environment and people. SASB standards are industry-specific and aimed at investors, using financial materiality. TCFD gave a recommendation structure for climate disclosures: governance, strategy, risk management, and metrics and targets. IFRS S1 (general sustainability-related disclosures) and IFRS S2 (climate-related disclosures), issued by the ISSB, build on TCFD and SASB and target investors with financial materiality.

In India, SEBI requires the top listed entities (by market capitalisation, as prescribed by SEBI) to file the Business Responsibility and Sustainability Report (BRSR) with the annual report. It is structured around the nine principles of the National Guidelines on Responsible Business Conduct (NGRBC) and has Section A (general disclosures), Section B (management and process) and Section C (principle-wise performance, with essential and leadership indicators). BRSR Core is a subset of key performance indicators for which reasonable assurance is required, phased in for the prescribed listed entities. Check the latest SEBI circulars for thresholds and dates.

The auditor's link: assurance gives users confidence in ESG data. You must know what is being reported and against which framework before you can assess whether it is reliable.

Key rules to remember

ESG pillars: ESG = Environment + Social + Governance; Always give two or three examples of each pillar in your answer.
Materiality lens: GRI = impact materiality; SASB and IFRS S1/S2 = financial materiality; Fast way to separate the frameworks. BRSR is mandated disclosure by SEBI based on NGRBC principles.
TCFD four pillars: Governance | Strategy | Risk management | Metrics and targets; IFRS S2 follows this structure for climate disclosures.
BRSR structure: Section A (general) + Section B (management and process) + Section C (principle-wise, essential and leadership indicators); Section C is based on the nine NGRBC principles.
BRSR Core: BRSR Core = selected KPIs from BRSR subject to reasonable assurance; Applies to prescribed listed entities on a phased basis; confirm current SEBI requirements.

How to solve ESG Concepts and Reporting Frameworks questions

Use this method for any question on ESG concepts or frameworks, whether theory or case-based.

1Read the question and mark what is asked: meaning, comparison, framework choice or applicability.
2Define ESG briefly and place the facts of the case under Environment, Social or Governance.
3Identify the user of the report: investors only, or wider stakeholders. This points to the framework.
4State the materiality lens: impact (GRI) or financial (SASB, IFRS S1/S2).
5Name the framework and its key structure, such as TCFD's four pillars or BRSR's sections.
6For Indian listed entities, bring in BRSR and BRSR Core and the assurance angle.
7Apply to the facts and conclude in one line, in provision-facts-conclusion form.

Quickest way: Audience and materiality shortcut

When to use it: For MCQs and short comparison questions where time is tight.

Ask: who reads the report? Wide stakeholders points to GRI; investors points to SASB or IFRS S1/S2.
Ask: is it climate only? IFRS S2 or TCFD.
Ask: is it a SEBI-listed Indian entity? BRSR, and BRSR Core for assured KPIs.
Eliminate options that mix up the materiality lens.

Common mistakes in ESG Concepts and Reporting Frameworks

Saying GRI and SASB are the same because both cover ESG.
Both are voluntary-looking standards on sustainability topics.
Fix: Remember audience and materiality: GRI is multi-stakeholder with impact materiality; SASB is investor-focused, industry-specific, with financial materiality.
Treating IFRS S2 as covering all ESG topics.
The S1/S2 numbering suggests two equal general standards.
Fix: S1 is general sustainability-related disclosure; S2 is climate-specific.
Confusing BRSR with BRSR Core.
The names look alike.
Fix: BRSR is the full report; BRSR Core is a subset of KPIs for assurance.
Calling TCFD a set of detailed metrics standards.
Students mix it with SASB or IFRS S2.
Fix: TCFD is a recommendations framework built on four pillars; IFRS S2 adopted its structure.
Writing only definitions without applying to the case.
Students memorise theory.
Fix: Classify each fact in the case into E, S or G and name the matching framework.

Worked examples

Example 1

Sunrise Textiles Ltd, a listed company, reports on emissions, worker safety incidents and board independence in its annual report. A director asks which part is E, S and G and whether SEBI requires a specific report. Advise.

Show the solution

Emissions relate to the Environment pillar.
Worker safety incidents relate to the Social pillar (employee health and safety).
Board independence relates to the Governance pillar.
SEBI requires prescribed top listed entities to file the BRSR with the annual report. If Sunrise is within the prescribed market capitalisation group, it must file it.
BRSR is built on the nine NGRBC principles, with Sections A, B and C.

Answer: Emissions = E, safety incidents = S, board independence = G. If Sunrise is among the prescribed listed entities, it must file the BRSR; otherwise it may do so voluntarily.

Example 2

An investor-focused Indian company wants climate disclosures in a structure that links to financial risk, while its NGO stakeholders want information on the company's impact on communities. Which frameworks suit each need?

Show the solution

Investors need financial-materiality information on climate risk: IFRS S2 (built on TCFD's four pillars: governance, strategy, risk management, metrics and targets). SASB industry standards also suit investors.
NGOs and communities want the entity's impact on economy, environment and people: GRI, which uses impact materiality.
The company can use both and also meet BRSR if it is a prescribed listed entity.
Conclude with matching each need to the framework.

Answer: Use IFRS S2 (with TCFD structure) or SASB for investors, and GRI for stakeholders concerned with impact. BRSR applies separately if SEBI requires it.

Exam tips

Prepare a one-page comparison table in your own notes: framework, audience, materiality, scope.
In case MCQs, look for the audience and the word climate to pick the framework quickly.
Always link the framework to assurance in the last line of a written answer.
Quote SEBI thresholds and dates only as per the latest circulars; do not guess numbers.

Practice questions from Sustainable Development Goals (SDG) & Environment, Social and Governance (ESG) Assurance

ESG Concepts and Reporting Frameworks in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ESG Concepts and Reporting Frameworks: frequently asked questions

What is the difference between GRI and SASB?

GRI serves many stakeholders and uses impact materiality, covering the entity's effect on economy, environment and people. SASB is industry-specific, aimed at investors, and uses financial materiality.

What are IFRS S1 and S2?

They are ISSB standards. IFRS S1 sets general requirements for sustainability-related financial disclosures, and IFRS S2 covers climate-related disclosures.

What is BRSR Core?

It is a subset of key performance indicators from the BRSR for which assurance is required. It applies to prescribed listed entities in phases, so check the latest SEBI requirements.

Is TCFD still a framework I must study?

Yes, for its four-pillar structure. IFRS S2 builds on it, so knowing TCFD helps you answer both.