Green Credits in BRSR, Mandatory?

4 days ago

4 min read

A graphic doing the rounds says SEBI has made green credits mandatory for companies. Before that lands on anyone's compliance checklist, it is worth reading what the rule actually says. The short answer is no, not this indicator. The longer answer is more interesting, because SEBI did change something real on 28 March 2025, and India's Green Credit Programme itself is worth understanding properly.

First, a quick definition. A green credit is a unit of incentive India awards for verified environmental action under the Green Credit Programme, set up by the Ministry of Environment, Forest and Climate Change under the Green Credit Rules, 2023. It is not a carbon credit and it is not a permit to pollute. It records that a specific environmental activity happened and was verified.

Definition slide - a green credit is a unit of positive environmental action under India's Green Credit Programme, notified on 12 October 2023 and run by ICFRE under MoEFCC.

Why the programme exists

The programme turns pro-planet work into something measurable and rewarded. It encourages voluntary environmental action through a market-based incentive, builds a national inventory of degraded forest land ready for restoration, and rewards the people and organisations who restore it.

Slide on why the Green Credit Programme exists - it turns pro-planet work into a market-based incentive and rewards verified environmental action.

Who can take part

Anyone can register on the official portal as a Green Credit Applicant. Individuals and groups of individuals, companies, PSUs and government institutions, NGOs and philanthropies. The administrator reviews and approves every registration. Joining the programme is voluntary.

The eight activities under the framework

The Green Credit Rules, 2023 name eight activity areas in their Schedule. Tree plantation, water management, sustainable agriculture, waste management, air pollution reduction, mangrove conservation and restoration, Ecomark label development, and sustainable building and infrastructure. One detail most coverage misses. A named activity is not automatically an earning route today. Only one activity is operational right now, tree plantation and eco-restoration on degraded forest land.

Grid slide showing the eight activities under the Green Credit framework, from tree plantation to waste management and sustainable building.

How a company earns a green credit today

The one operational route runs like this. A company registers on the Green Credit portal as a Green Credit Applicant. The forest department identifies degraded land parcels, verifies them on the ground and uploads them to the portal. The applicant picks an identified parcel outside protected areas, prepares a detailed project report with technical inputs from the forest division, and the state nodal officer approves it. The applicant then signs an MoU with the state and funds the entire restoration, including verification and maintenance. Progress reports go up every six months. After a minimum of five years of restoration work, and once the parcel reaches at least 40 percent canopy density, the applicant can submit its claim. The administrator verifies the restored parcel through a designated agency and then issues the credits, one credit for each new surviving tree older than five years. The company earns the credits, but gets no ownership or usage rights over the land.

Process slide - register on the portal, select degraded forest land, sign and fund the restoration, plant, and get verified to earn the credit.

What a green credit can be used for

A green credit earned through tree plantation can be exchanged once, for one of a few defined purposes. Meeting compensatory afforestation obligations when forest land is diverted for non-forest use. Meeting corporate social responsibility requirements. Meeting tree plantation obligations tied to approvals for projects. Once exchanged, a credit is extinguished. It can also be reported under ESG leadership indicators, which is exactly where the SEBI change comes in. One more limit worth knowing. These credits are non-tradable and non-transferable, except between a holding company and its subsidiaries.

With the basics in place, here is the SEBI picture, slide by slide.

What SEBI actually did

On 28 March 2025, SEBI added an eighth leadership indicator to Principle 6 of the Business Responsibility and Sustainability Report, the principle that covers the environment. Listed entities are now asked how many green credits they generated or procured. This applies from FY 2024-25 disclosures onwards, and the provision sits inside SEBI's LODR Master Circular, last updated on 30 January 2026.

Whose green credits get reported

The indicator does not stop at the listed company. It asks about three groups. The listed entity itself, its top ten value chain partners by value of purchases, and its top ten value chain partners by value of sales. Purchases and sales are two separate lists, so the net is wider than it first looks. If you supply to a large listed company, this question can travel down to you.

The distinction that matters

Slide explaining the key distinction - being listed in the BRSR format does not make an indicator mandatory. Essential indicators are required, leadership indicators are the voluntary tier.

Being listed in the BRSR format does not make an item mandatory. The BRSR has two tiers. Essential indicators must be reported. Leadership indicators are the voluntary tier, and the new green credit question sits in the voluntary tier. SEBI has not made green credits mandatory, and it has not made this disclosure compulsory. What it has done is create a standard place in India's main sustainability report where companies can choose to show green credit activity, including activity in their supply chains.

A green credit is not a carbon credit

The two are often used interchangeably, and that is a genuine error. A carbon credit tracks one thing, the reduction or removal of greenhouse gas emissions. A green credit is broader. It comes from the Green Credit Programme, a national initiative by the Ministry of Environment, Forest and Climate Change under the Green Credit Rules, 2023, administered by the Indian Council of Forestry Research and Education.

Slide comparing a green credit with a carbon credit - the two are often mixed up but they measure different things.

Before it lands on your checklist

Three habits are worth keeping for any new ESG claim. Read what the indicator actually asks. Check whether it sits in the mandatory or voluntary tier. And know what evidence supports your answer. Voluntary does not mean invisible, because investors, lenders and customers read BRSR reports, and a blank answer is also an answer. But accuracy starts with reading the rule correctly, not the headline about the rule.

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