In a step towards promoting responsible business conduct, the Ministry of Corporate Affairs (MCA) has issued an advisory recommending that Limited Liability Partnerships (LLPs) begin voluntarily disclosing Environmental, Social, and Governance (ESG) metrics in their annual reports. While not yet mandatory, this move is designed to align LLP practices with global sustainability standards and foster transparency, especially among startups and professional firms with environmental or social impact. The disclosure is encouraged to be included as an annexure to Form 11 (Annual Return) or in an internal annual statement for stakeholders.

According to the advisory, ESG metrics should broadly cover carbon footprint, energy and resource usage, waste management practices, employee diversity, labor standards, community engagement, and internal governance protocols. LLPs in sectors such as technology, consulting, logistics, and manufacturing are encouraged to adopt a structured ESG reporting framework, such as the Global Reporting Initiative (GRI) or India’s Business Responsibility and Sustainability Report (BRSR) Lite version. While smaller LLPs may begin with qualitative disclosures, larger LLPs are urged to include quantifiable data and ESG performance indicators.

Experts view this advisory as a forward-looking measure that will help LLPs gain stakeholder trust, attract ESG-focused investors, and improve operational accountability. The MCA has also announced plans to release templates and illustrative examples to help LLPs get started with ESG disclosures. By gradually incorporating ESG into mainstream compliance, the government aims to build a sustainability-conscious business ecosystem across entity types, not just limited to listed companies and large corporations.