Environmental, Social and Governance (ESG) - Principles and Practice · Governance Influencers

Governance Codes, Frameworks and Global Initiatives for CS Professional

Updated 11 October 2026 · Fact-checked

Governance codes and frameworks are standards that tell companies and investors how to govern themselves and report on sustainability. OECD Principles guide governance, UN PRI guides investors, UNGC guides company conduct, GRI guides impact reporting and BRSR is India's mandated report. To answer, state the source, purpose, users and legal status.

Understand Governance Codes, Frameworks and Global Initiatives

A governance code or framework is a set of principles or rules that shapes how a company is directed and how it reports. Some are laws. Many are voluntary. Voluntary ones still matter because investors, regulators and lenders use them to judge a company.

Start with the five names you must know. The OECD Principles of Corporate Governance (issued by the Organisation for Economic Co-operation and Development, jointly with the G20 in their later versions) are a global benchmark for policymakers. They are not binding. The 2023 edition covers the base for an effective governance framework, shareholder rights and key ownership functions, institutional investors and markets, disclosure and transparency, board responsibilities, and sustainability and resilience. Earlier editions, such as 2015, had a separate chapter on the role of stakeholders. Check the exact chapter headings and the latest edition in your study material.

The UN Principles for Responsible Investment (UN PRI) are for investors. Signatories commit to six voluntary principles, which include incorporating ESG issues into investment analysis and decisions, being active owners, seeking ESG disclosure from the entities they invest in, and promoting acceptance of the principles. The UN Global Compact (UNGC) is for companies. It asks them to support ten principles on human rights, labour, environment and anti-corruption, and to report progress.

The Global Reporting Initiative (GRI) gives reporting standards for a company's impacts on the economy, environment and people. It follows an impact view of materiality. BRSR (Business Responsibility and Sustainability Report) is SEBI's format under the Listing Regulations. It is mandatory for the top 1,000 listed companies by market capitalisation (from FY 2022-23), and others may report voluntarily. BRSR Core, with assurance, applies in phases to a subset of these companies. BRSR replaced the earlier Business Responsibility Report. Confirm the current phase-in details from your study material.

A simple way to hold them together: OECD sets the governance benchmark, UN PRI directs investors, UNGC sets conduct principles for companies, GRI says how to report impacts, and BRSR is the Indian mandatory report. Always say who issues it, who uses it and whether it is binding.

Key rules to remember

Five-point recall for any framework: Issuer + Purpose + Users + Content + Legal status; Use this skeleton for every code or framework you describe in an answer.
Who each framework addresses: OECD → policymakers and boards | UN PRI → investors | UNGC → companies | GRI → reporters | BRSR → Indian listed companies; Matching the framework to its audience is a frequent exam point.
Legal status rule: OECD Principles = non-binding; UN PRI, UNGC, GRI = voluntary; BRSR = mandatory for the top 1,000 listed companies by market capitalisation specified by SEBI; voluntary for others; Say non-binding or voluntary does not mean unimportant.
UN PRI: 6 principles for investors; Remember the order: (1) incorporate ESG in analysis and decision-making, (2) active ownership, (3) seek appropriate disclosure, (4) promote acceptance and implementation, (5) work together to enhance effectiveness, (6) report on activities and progress.
UNGC: 10 principles under 4 heads: human rights, labour, environment, anti-corruption; Know the heads even if you cannot list all ten.
OECD Principles: 6 chapters (2023 edition): framework, shareholder rights and ownership functions, investors and markets, disclosure and transparency, board responsibilities, sustainability and resilience; The 2015 edition had a separate stakeholder chapter and no sustainability and resilience chapter. Check the order against the edition in your study material.

How to solve Governance Codes, Frameworks and Global Initiatives questions

Use one method for a descriptive question on a code, framework or initiative. It keeps your answer structured and complete.

1Read the question and mark the verb: explain, compare, discuss or advise.
2Name the framework, its issuer and why it exists, in one or two lines.
3State who it is meant for and whether it is voluntary or mandatory.
4List its core content: principles, chapters or disclosure heads, as the framework has them.
5Link it to the Indian context: Companies Act, 2013, SEBI Listing Regulations or BRSR where relevant.
6For case questions, apply it to the facts given and say what the company or investor should do.
7For comparison questions, use the same heads for both: scope, audience, materiality, status, assurance.
8Close with a one-line conclusion that answers the question asked.

Quickest way: Issuer-Audience-Status shortcut

When to use it: Use it when you have only a few minutes for a short-note or when you cannot recall full lists.

Write the full name and issuer first.
Add the audience: investors, companies, boards or reporters.
Add the status: voluntary or mandatory.
Give the group count only if you are sure, such as 6 PRI principles or 10 UNGC principles.
Add one India link, for example BRSR under SEBI Listing Regulations.
End with one line on why it matters to stakeholders.

Common mistakes in Governance Codes, Frameworks and Global Initiatives

Treating OECD Principles as a binding law.
The word principles is read as rules, and Indian rules are often drawn from them.
Fix: Say they are a non-binding international benchmark that countries and regulators may adopt.
Mixing up UN PRI and UNGC.
Both are UN-backed and have the word principles.
Fix: Link PRI to investors and UNGC to companies. Say the word investment for PRI.
Saying BRSR is voluntary for every company.
Students remember that GRI is voluntary and assume the same for BRSR.
Fix: State that BRSR is mandatory for the listed companies SEBI specifies, and voluntary for others.
Calling GRI and BRSR the same thing.
Both are sustainability reports with similar topics.
Fix: Contrast issuer, status, geography and format. GRI is a global voluntary standard, BRSR is a SEBI-prescribed Indian format.
Writing a list of names with no explanation.
Students memorise acronyms and skip the analysis marks.
Fix: For each name add purpose, audience and effect on the company or investor.
Giving exact figures or dates from memory without being sure.
Thresholds and editions change.
Fix: Use only figures you have checked in your study material. Otherwise describe the rule in words.

Worked examples

Example 1

Explain the UN Principles for Responsible Investment and the UN Global Compact. How do they differ?

Show the solution

Define UN PRI: a voluntary set of six principles for investors to include ESG factors in investment decisions and ownership practices.
Define UNGC: a voluntary initiative asking companies to follow ten principles on human rights, labour, environment and anti-corruption.
Audience: PRI addresses asset owners and managers. UNGC addresses companies.
Action: PRI signatories integrate ESG in analysis, act as active owners, seek disclosure from investee entities and report progress. UNGC participants embed the principles in strategy and report progress.
Status: both are voluntary and depend on commitment and reporting, not on legal penalty.
Link: an investor under PRI may ask a company to report under UNGC, GRI or BRSR, so the two work together.

Answer: UN PRI guides investors to use ESG in investing, with six principles. UNGC guides companies to follow ten principles on human rights, labour, environment and anti-corruption. Both are voluntary. They differ in audience and focus.

Example 2

Aarav Textiles Limited is a listed company in India. Its board asks whether it should report under BRSR, GRI or both. Advise the board.

Show the solution

Provision: BRSR is SEBI's prescribed report under the Listing Regulations, mandatory for the listed companies SEBI has specified. GRI is a voluntary global standard.
Analysis of facts: the company is listed. First check whether it falls within the class of listed companies for which BRSR is mandatory. If yes, it must file BRSR.
Even if not covered, BRSR can be adopted voluntarily and prepares the company for later coverage.
GRI is not needed for compliance. It helps if the company has global investors or customers who want impact-based disclosures.
Practical point: BRSR and GRI overlap in topics, so data can be collected once and mapped to both. The board should assign this to the ESG or risk committee with the company secretary coordinating.
Conclusion: report under BRSR if covered, and consider GRI as an additional voluntary report.

Answer: The board must report under BRSR if Aarav Textiles is within SEBI's mandated class. GRI is optional and may be added for global stakeholders, using common data to save effort.

Exam tips

Expect short notes on OECD, UN PRI, UNGC, GRI and BRSR. Prepare a four-line note for each using issuer, audience, content and status.
For comparison questions, draw the answer in paragraphs or bullets with the same heads for each framework. Do not use tables if you cannot draw them neatly.
In case-based questions, state the provision, apply it to the facts, then conclude. Name the company in your answer.
Check every number and threshold against your study material before the exam. If unsure, describe the rule in words.
Link global frameworks to Indian practice. A mention of BRSR or the Listing Regulations often earns extra marks.

Practice questions from Governance Influencers

Governance Codes, Frameworks and Global Initiatives in other exams

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

Governance Codes, Frameworks and Global Initiatives: frequently asked questions

What are the OECD Principles of Corporate Governance?

They are a non-binding international benchmark to help countries improve their legal and regulatory governance framework. They cover shareholder rights, stakeholders, disclosure and board responsibilities. India's rules draw on similar ideas.

What is the difference between UN PRI and UN Global Compact?

UN PRI is for investors who commit to six principles for responsible investing. UNGC is for companies that commit to ten principles on human rights, labour, environment and anti-corruption. Both are voluntary.

What is the difference between GRI and BRSR?

GRI is a global voluntary standard for reporting a company's impacts. BRSR is the SEBI-prescribed format for Indian listed companies and is mandatory for those specified by SEBI. BRSR is shaped for Indian regulation, while GRI is used worldwide.

Is BRSR mandatory for all companies?

No. It is mandatory for the listed companies SEBI has specified under the Listing Regulations. Other companies may report voluntarily. Check the current applicability in your study material.

How should I study this topic for the exam?

Make one note per framework with issuer, audience, content and status. Then practise two comparisons: PRI versus UNGC and GRI versus BRSR. Write short answers under time limits.