Carbon credits and sustainability reporting are moving from specialist topics to mainstream business priorities, especially as companies face tighter climate disclosure expectations and growing pressure to prove real emissions reductions. In India, this shift is being shaped by the Carbon Credit Trading Scheme, the Green Credit Programme, and SEBI’s BRSR framework, which together are pushing companies toward more transparent, measurable climate action.
Carbon Credits Matter
Carbon credits are tradable units linked to verified climate action, usually created when a project reduces, removes, or avoids greenhouse gas emissions. In practice, they can support compliance goals, offset a limited portion of residual emissions, or help finance low-carbon projects such as renewable energy, afforestation, methane capture, and energy efficiency.
The bigger point is that credits are no longer just a carbon-market instrument; they are increasingly part of how companies explain their climate strategy to investors, regulators, customers, and employees.
For businesses, the value of carbon credits depends on credibility, traceability, and disclosure quality, not just purchase volume.
Reporting is Changing
Sustainability reporting has evolved beyond broad CSR storytelling. Today, companies are expected to disclose climate risks, emissions inventories, governance, targets, and the role of carbon credits in their transition plans, often in a format that can be compared across peers. The ISSB’s IFRS S1 and S2 standards were created to provide a global baseline for investor-focused sustainability disclosure, while TCFD-aligned climate reporting has effectively been folded into that global structure.
This matters because carbon credits can no longer be treated as an afterthought in a sustainability report; companies are increasingly expected to explain what they bought, why they bought it, and whether the credits genuinely support climate claims.
India’s Policy Push
India has taken a notable step by operationalising the Carbon Credit Trading Scheme (CCTS), which aims to price emissions through tradable Carbon Credit Certificates and create the foundation for the Indian Carbon Market.
The government has also put in place a monitoring, reporting and verification framework, sectoral greenhouse gas intensity targets, accredited verification processes, and a registry-led market structure to improve transparency and market integrity.
Alongside this, the Green Credit Programme adds a voluntary channel for environmentally positive actions such as tree plantation and water conservation, widening participation beyond heavy industry. Together, these initiatives show that India is building both compliance and voluntary pathways for climate action.
BRSR and ESG Disclosure
India’s sustainability reporting story is also being reshaped by SEBI’s Business Responsibility and Sustainability Reporting, or BRSR. The framework requires top listed companies to disclose structured ESG information in their annual reports, helping turn sustainability from a narrative exercise into a data-led reporting discipline.
SEBI later introduced BRSR Core and assurance-related requirements, reinforcing the move toward more reliable and audit-ready ESG disclosures.
For companies dealing with carbon credits, this is important because disclosure now needs to connect emissions data, transition strategy, and climate investments in one consistent story.
What Good Disclosure Looks Like
A strong sustainability report does more than say a company “supports climate action.” It shows the emissions baseline, the reduction pathway, the share of emissions addressed through internal abatement, and the limited role of carbon credits in any residual footprint.
Good reporting should also name the project standard, project type, vintage, serial numbers, retirement date, and whether any corresponding adjustment is relevant under Article 6 of the Paris Agreement.
This level of detail helps prevent greenwashing and makes it easier for stakeholders to separate genuine climate progress from marketing language.
India’s Key Initiatives
India’s carbon and sustainability ecosystem now has several moving parts that companies should track. The CCTS is building a national carbon market with compliance and offset mechanisms, while the Green Credit Programme is encouraging voluntary environmental action across sectors.
SEBI’s BRSR framework is improving ESG transparency for listed firms, and the broader direction of Indian regulation is clearly toward measurable disclosure, independent verification, and stronger climate governance.
For Indian industry, this creates an opportunity as firms that invest early in emissions measurement, internal decarbonisation, and high-quality disclosures will be better prepared for domestic compliance and global supply-chain demands.
Carbon Credit Trading Scheme
The Carbon Credit Trading Scheme (CCTS) has been notified with the objective of reducing, removing, or avoiding greenhouse gas emissions from the Indian economy by pricing such emissions through the trading of Carbon Credit Certificates (CCC).
The Government has taken several measures to operationalise the Indian Carbon Market (ICM), including establishment of the requisite institutional framework, notification of Greenhouse Gas Emission Intensity (GEI) targets for seven energy-intensive sectors under the compliance mechanism. Further, approved methodologies under the offset mechanism, a robust monitoring, reporting and verification framework, and procedures for accreditation of carbon verification agencies have been put in place.
In the ICM, industries, as obligated entities, are envisaged to reduce emissions by improving efficiency and adopting low-carbon technologies. Entities that over-achieve their notified Greenhouse Gas Emission Intensity (GEI) targets are eligible for issuance of CCC, which are tradable through power exchanges. Non-obligated entities, including renewable energy producers, may voluntarily register approved mitigation activities for the purpose of seeking issuance of CCC.
The financial support for implementation of the CCTS is to be met by the Bureau of Energy Efficiency from the fees and charges collected from entities under the Scheme and its own resources. Regulatory support for trading activities under the Indian Carbon Market, including matters relating to trading of carbon credit certificates, is provided by the Central Electricity Regulatory Commission.
The institutional arrangements for implementation of the Scheme comprise a National Steering Committee co-chaired by the Secretaries of the Ministry of Power and the Ministry of Environment, Forest and Climate Change, with Grid Controller of India Limited functioning as the Registry and the Bureau of Energy Efficiency serving as the Administrator.
Business Impact
Carbon credits are becoming a finance and strategy issue, not just an environmental one. Buyers, investors, and regulators increasingly want to know whether a company is reducing emissions at the source or relying too heavily on offsets. That means sustainability reporting must show how carbon credits fit into a hierarchy of action: first avoid, then reduce, then offset what cannot yet be eliminated.
Companies that use credits responsibly can support climate investment, but only if they disclose the scale, quality, and purpose of those credits with precision.
Next Phase of Sustainability Reporting
The next phase of sustainability reporting will likely reward companies that can connect climate ambition with hard numbers. In India, that means aligning carbon-market participation with BRSR disclosure, robust MRV systems, and credible project verification. It also means treating sustainability reports as decision-making tools rather than branding documents, because global standards are moving toward comparable, investor-grade data.
As the Indian Carbon Market matures and voluntary mechanisms expand, carbon credits will become more useful only when they are embedded in transparent reporting and backed by real climate outcomes.
