Investor Response to Climate Risk Disclosure under SEBI's BRSR Framework in India

Global warming has become a financial and material risk to Indian companies because of increasing natural physical risk, emerging domestic regulation and increased demands on the part of international and national investors.Starting in 2021, the Business Responsibility and Sustainability Reporting (BRSR), which is a process of standardised disclosure of Environmental, Social, and Governance (ESG) data, both metrics and disclosure narratives on climate-related matters, is required of the top 1,000 listed companies by the Securities and Exchange Board of India (SEBI).In this paper, the reporting of climate change as a part of BRSR and other frameworks is evaluated in light of their impact on investor behaviour in India, through Foreign Portfolio Investors (FPIs), Domestic Institutional Investors (DIIs), and ESG-labelled funds.Building on the international literature of climate disclosure and decision-making of investors combined with the evidence drawn on Indian policy documents, investor communication and recent emerging empirical research, the paper contends that, as an Indian policy, climate reporting is in an intermediate phase currently.It has outgrown its purely symbolic compliance, but has not as yet become a capital reallocation tool that is prospective in nature.BRSR climate disclosures are increasingly being screened, engaged, and evaluated, particularly by investors, but enduring data gaps, weaker assurance and boilerplate narratives prompt the latter to over rely on thirdparty ESG ratings, management dialogue, and international reporting frameworks including TCFD.The paper ends with the inference to the regulators, companies, and investors on how effective the decision usefulness of climate reporting can be and how the practises of disclosure can be in accordance to the India net-zero-by-2070 transition pathway can be achieved.