Music on the Block: How Music Artists can Benefit from Blockchain Technology

All of us make use of music streaming services quite frequently. But have we ever stopped to wonder how the creators or artists get paid for their music? More often than not, music artists are forced to settle with modest royalty earnings. Nevertheless, the advent of blockchain technology has ushered in a new era and this technology has the potential to ensure that music artists get adequate compensation for their efforts and talent.

All have enjoyed music throughout the ages. The music industry has evolved from EP records to Cassettes to CDs to MP3s. Currently, music is enjoyed predominantly via digital streaming platforms such as Spotify, and Apple Music, and closer home services such as Airtel Wynk, Times Music, JioSaavn, etc.

However, the growth in streaming services like Spotify has not benefited individual artists who typically receive very little royalty overall because of slowing album sales. Taylor Swift, a famous musician, went to the extent of removing her music from Spotify due to the low per-stream royalty.

The advent of blockchain technology has set the stage for the music industry to undergo another evolution. With the blockchain, artists can create a token-based economy where the value is derived from an artist’s work. When a token is created, the artists convert their intellectual property into a financial asset that all of us can purchase. All holders of this token receive a portion of the artists’ revenue. Hence the more consumers of the content, the higher the token’s value. An artist thus can raise revenue through the launch of a token.

Tokenization of the asset also assists in the removal of the middleman. Currently, recording labels take away the majority of the gains. Recording labels also act as hindrances many a time for the entry of new artists into the business. A system based on blockchain eliminates the middleman, thus putting the power back into the hands of the creators. Funds are raised by fans rather than the recording label via tokenization. The flip side of this model is the lack of users.

A few platforms exist such as Theta.tv,  the YouTube of Web 3.0, or Audius (which is said to be the equivalent of Spotify or Apple Music). Having used these platforms, it is safe to say that though there is a vast scope, their success and similar platforms will depend on the consumers or users.

Artists can also utilize Non-Fungible Tokens (“NFT”) to create a new vertical of revenue generation from their work. Purchasing music as NFTs holds much value for both the creator and the collector. For one, there is a transfer of ownership.

In a world driven by music streaming, the conundrum arises of why a purchase of the rights in music would be required. The answer, as always, lies in the monetization of the asset. The purchaser sees value in buying the rights and reselling them later for a potential profit. Such music NFTs benefit artists at both the initial sale pricing and the secondary sales. Artists can earn from secondary sales in the form of royalties, especially if the underlying smart contract attached to the music NFT is so that they can earn future royalties on such sales.

Platforms such as Async.art help artists mint NFTs of their musical works, and Catalog Works let music fans bid on digital records. Award-winning artist, Ross Golan who has worked with renowned artists like Ariana Grande and Justin Bieber, and rock bands such as Maroon 5 and Linkin Park, also recently minted The World’s First NFT Musical, The Wrong Man.  

There is still much grey area regarding the synergy between blockchain and music. However, the benefits, as well as the various avenues, are something that cannot be denied. In time, we are confident of innovative music-focused NFT projects, which will hopefully allow the creators or artists to get the compensation they deserve for their craft.

Image Credits:

Photo by Matthias Groeneveld: https://www.pexels.com/photo/set-of-retro-vinyl-records-on-table-4200745/

The advent of blockchain technology has set the stage for the music industry to undergo another evolution. With the blockchain, artists can create a token-based economy where the value is derived from an artist’s work. When a token is created, the artists convert their intellectual property into a financial asset that all of us can purchase. All holders of this token receive a portion of the artists’ revenue. Hence the more consumers of the content, the higher the token’s value. An artist thus can raise revenue through the launch of a token.

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The Curious Case of the Robolawyer (No, it's not a Perry Mason Novel!)

With the advent of technology, there is a drastic increase in the use of AI (Artificial Intelligence) which has significantly altered the way technology is perceived and will have a far-reaching impact in the future. Hence, it becomes necessary to try to minimize its shortcomings and make prudent use of the technology.

I do not know how many of you have heard of Joshua Browder, the 26-year-old founder of DoNotPay, a US-based venture that has developed a “robolawyer”- essentially an AI-powered bot that helps users in use cases such as appealing vehicle parking tickets, negotiating airline ticket refunds, and contesting service provider bills. Although the app was first released in 2015, to be honest, until recently, I too had not heard of him or the app!

My curiosity was piqued when I recently read the news that his company is willing to pay a million US dollars to any person or lawyer willing to repeat verbatim in front of the Supreme Court judge all that their robolawyer asks them to. It remains to be seen whether someone will take Josh up on that offer, whether the US Supreme Court will grant permission and what the outcome will be. However, it is being reported in the media that the DoNotPay app will help two defendants argue speeding tickets in US courts next month. The company has promised to pay the fines on behalf of the users if the robolawyer loses their appeals.

The app runs on the AI model known as “Generative Pre-trained Transformer” or GPT. This is the same technology that runs ChatGPT, which reportedly hit a million users in less than a week of its launch. AI technologies are constantly improving, and there is now greater emphasis on “ethics” and “explainability.” Essentially, the software must be able to explain how it arrived at a certain conclusion or output. This is important to minimize, if not altogether eliminate, the risk of biases and prejudices that creep into AI software simply because it is trained using hundreds of millions of content elements on the web (articles, images, reports, videos, etc.) that were all created by humans, and as such, carry the individual beliefs, prejudices, convictions, etc. of their original creators.

Over the coming decades, AI will shake up many fields including legal practice, healthcare, finance, etc. Not all fields will be impacted at the same pace or to the same extent but change they will. Already, AI is being used by healthcare professionals in improving the efficacy of diagnosis and confirmation of lines of treatment. Law firms too are beginning to use AI to simplify the tedium of the process of trawling through case laws and legal judgments to identify precedents and the reasoning of the benches involved. Soon, lawyers will simply be able to type in questions into ChatGPT, which will provide well-reasoned answers in a matter of minutes. Of course, the real skill will be to ask the right questions and figure out how sensible the answers are, and decide on further courses of action. Think of it as an advocate briefing a senior lawyer before the latter argues in court.

Half-baked knowledge is dangerous. For many years, patients (and/or caregivers) have used search engines to find information about symptoms, diagnostic tests, and lines of treatment and then argue with qualified medical professionals about their choices, at times forcing doctors to explain their hypotheses and reasoning. It is quite likely that in the foreseeable future, clients of lawyers and law firms too will be tempted to adopt a similar approach, which means lawyers too will end up spending time and effort on educating clients on matters of law and jurisprudence. Maybe it is worth coming up with new pricing models to dissuade frivolous “brainstorming” and “legal strategy” sessions!

Note to myself: Try out ChatGPT to explore the kind of responses it provides and start preparing for a future that will undoubtedly be more closely linked with AI tools.

References:

[1] Design Application Numbers 274917, 274918, 284680, 276736, 260403

[2] 24 U.S.P.Q.2d (BNA) 1614 (BPAI Apr. 2, 1992)

[3] Apple, Inc. v. Samsung Elecs. Co., 926 F. Supp. 2d 1100 (N.D. Cal. 2013) (partially affirming jury damages award).

[4] US6763497B1

[5] US10915243B2

Image Credits:

Photo by cottonbro studio: https://www.pexels.com/photo/person-using-macbook-3584994/

Over the coming decades, AI will shake up many fields including legal practice, healthcare, finance, etc. Not all fields will be impacted at the same pace or to the same extent but change they will. Already, AI is being used by healthcare professionals in improving the efficacy of diagnosis and confirmation of lines of treatment. Law firms too are beginning to use AI to simplify the tedium of the process of trawling through case laws and legal judgments to identify precedents and the reasoning of the benches involved.

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Registration of GUI as Designs: Existing Provisions and Challenges

In this article, an attempt is being made to highlight how GUIs can be protected and to ascertain the challenges faced by applicants in filing design applications for the registration of GUIs.

Introduction

A Graphic User Interface (GUI) which allows users to interact with electronic devices or machines, is widely used in the present digital age. The term was coined in the 1970s to distinguish graphical interfaces from text-based ones, such as command line interfaces (CLI), etc. Apple’s GUI-based operating system – Macintosh, Microsoft’s Windows, Mobile Touch Screens, and other 3D interfaces (Eg. Augmented Reality) are all examples of GUIs.

Protection of GUI: A Look at Locarno Classification and Designs (Amendment) Rules, 2021

Just as trademarks are classified into various classes of goods and services provided for in the internationally accepted NICE classification, Designs also have a classification of articles to which a design can be applied, known as the Locarno Classification.

The Locarno Classification, developed under the Locarno Agreement (1968), is an international classification used for registering industrial designs. India became the 57th member to be a signatory to the Locarno agreement in 2019. The changes were incorporated through the Designs (Amendment) Rules, 2021, thereby bringing the classification of industrial designs at par with the rest of the world as opposed to the previous national classification.

Subsequently, on 25th January 2021, the Ministry of Commerce and Industry notified the Designs (Amendment) Rules, 2021, which substituted Rule 10 of the Design Rules 2001, and incorporated the current edition of the Locarno Classification, which specifically created Class 14 – Recording, telecommunication, or data processing equipment, with a subclass “Class 14-04 – Screen Displays and Icons”, and further provided for Class 32, allowing for two-dimensional graphic designs, graphic symbols, and logos, to be protected under the Designs Act, 2000, provided that these designs satisfy the essentials of an ‘Article’ and a ‘Design’ as defined in Sections 2(a) and 2(d) of the Act.

Lacunae in Legislation

As per the Designs Act, 2000, a design means “only the features of shape, configuration, pattern, ornament, or composition of lines or colours applied to any article, whether in two dimensional or three dimensional or in both forms, by any industrial process or means, whether manual, mechanical or chemical, separate, or combined, …”

Now, this is precisely where the problem arises. Even after the Locarno Classification was introduced and the Designs Rules were amended to deal with confusion and uncertainties in the classification of industrial designs, the lawmakers have failed to amend the definition of ‘Design’ and bring the Designs Act, 2000, along the same lines. Further, the Controllers make conflicting observations and the interpretations provided by them seem to lack uniformity.

A GUI should be protected since its intrinsic purpose is to enhance the visual appeal of the program and thus build on its commercial value. The definition of a design given under the Act is limited and does not expressly provide for graphics and/or software. Due to this lacuna, the definition is open to multiple interpretations.

Practice Followed by the Indian Design Office

Before 2009, Microsoft was granted registration for some of its designs under Class 14-99, in the ‘Miscellaneous’ category. Thereafter, in the year 2014, Amazon filed a design application under no. 240305 pertaining to a “Graphic user interface for providing supplemental information of a digital work to a display screen”, which was rejected by the Design Office, on the grounds that GUIs do not qualify as designs under Section 2(d) of the Act, they lacked “consistent eye appeal” and were not physically accessible.

Over the years, several new applications for the registration of GUIs have been filed. While a few have been granted[1], most Examiners opine that the GUIs do not fall under the definition of ‘designs’ and hence, cannot be protected. Hence, applicants are wary of filing design applications for registration of GUIs due to the absence of robust precedents.

Observations made by US Courts

In Ex Parte Tayama[2], the Court made the following observations –

  1. Programmed Computer Systems would suffice to be termed as an article of manufacture.
  2. Design (GUI) is an integral part of computer programmes.

Further, the patent battle[3] between Apple and Samsung (2011 – 2018) ended with Apple being awarded $539 million for Samsung’s infringement of its initial design. Apple was all the while contending to protect its “Total User Experience”.

Various Design Patents have been granted by USTPO, such as apparatus for displaying the path of a computer program error as a sequence of hypertext documents in a computer system having display[4], device, method, and graphical user interface for adjusting content selection[5], etc.

European Union’s Position

EU also provides wide protection to designs under EU Directive 98/71/EC on Legal Protection of Designs. GUIs in the EU are generally registered under the Community Design Regulation (Council Regulation No. 6/2002/EC) but may also exist as unregistered Community Designs. The regulation, however, excludes computer programmes.

Conclusion

The current definition of a design is inadequate and does not expressly cover the aspects of graphics/GUIs. Undoubtedly, the various developments in the IT industry have made the world realize the importance of protecting graphics. However, the introducing of international classification (Locarno Classification) and bringing amendments to existing laws are not sufficient. It is imperative to establish new guidelines and provide appropriate training to the Examiners at the Design Office so that a uniform mechanism is in place to facilitate the registration of graphic symbols/GUIs.

References:

[1] Design Application Numbers 274917, 274918, 284680, 276736, 260403

[2] 24 U.S.P.Q.2d (BNA) 1614 (BPAI Apr. 2, 1992)

[3] Apple, Inc. v. Samsung Elecs. Co., 926 F. Supp. 2d 1100 (N.D. Cal. 2013) (partially affirming jury damages award).

[4] US6763497B1

[5] US10915243B2

Image Credits:

Photo by cottonbro studio: https://www.pexels.com/photo/person-using-macbook-3584994/

A GUI should be protected since its intrinsic purpose is to enhance the visual appeal of the program and thus build on its commercial value. The definition of a design given under the Act is limited and does not expressly provide for graphics and/or software. Due to this lacuna, the definition is open to multiple interpretations.

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Regulating Online Gaming Intermediaries - The Rules and their Implications

The Ministry of Electronics and Information Technology (MeitY) has released the draft Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules to bring online gaming intermediaries within the ambit of the IT Rules, 2021.

Background

Online gaming is one of the fastest-growing industries in India with the number of gamers expected to increase by 30 million from 2022 to 2023[1]. Following the increase in the number of users, it has become imperative that appropriate laws are introduced to regularize the online gaming industry. On January 02, 2023, the Ministry of Electronics and Information Technology (“MeitY”) proposed an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules”). The IT Rules, in its current structure, provide regulation for social media intermediaries and significant social media intermediaries. The Draft[2] “Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules” (the “Draft”), which is open for consultation from the public, proposes to extend its ambit to ‘online gaming intermediaries’ forming a part of Part II (that relates to other intermediaries).

The Draft defines “online gaming intermediaries” and “online games” but lacks to provide a clear distinction between “games of chance” and “games of skill”, which has been a sticky issue over the years. The Draft further proposes (inter alia) the following changes –

  • All online games would be required to be registered with a ministry-approved self-regulated body by creating a self-regulatory framework, to be registered with MeitY. The self-regulatory body will be responsible for reviewing and registering the online games offered by its members, subject to certain prescribed factors. Games approved by the self-regulatory body may be offered with a visible mark signifying their registration.
  • The proposed rules also mention certain compliances that need to be made by the social media firms such as checking the registration of the online gaming intermediary and consulting the self-regulatory officer before allowing any advertisement on their platform.
  • The online gaming intermediary shall comply with the requirement of due diligence and shall additionally ensure they do not host any online game that does not conform with Indian laws and shall make additional disclosures to the users including the refund and withdrawal policy, financial risks, and other risks associated with gaming, measures that are in place to ensure the safeguarding of deposits, etc.
  • In addition to the above, a new set of due diligence requires compliance with mandatory know-your-customer(KYC) norms for user verification as per Reserve Bank of India norms.
  • Similar to the requirement for social media intermediaries, requirements of appointment of a resident ‘compliance officer’ and ‘grievance officer’ have been mandated along with ‘nodal officers’ for round-the-clock coordination with law enforcement agencies and officers.
  • The online gaming intermediaries need to have a physical address in India and the same is required to be published on their website.

Purpose of the Draft

The purpose of the Draft, if it becomes the law, is to protect the interests of different stakeholders, ensure the safety of players and encourage responsible gaming.  The Draft is also put together to bring about uniformity of laws that online gaming intermediaries may be required to follow by reducing the burden of following state-specific gaming measures making it, not just easier for online gaming intermediaries to comply with the law, but also helps the enforcement agencies since it becomes difficult for the governments of different states to ensure geographical checks are in place. According to the ministry, the final amendments to the IT rules would be notified by April 2023.

Discussions & Implications

While the Draft seems to have been aiming at shaping a burgeoning gaming industry, the concerns around the Draft seem to be supplementing the already existing questions on the existing IT Rules.

At the outset, the question of whether ‘online gaming’ should remain a subject of the ‘States’ (as betting and gambling have traditionally been) or the ‘Centre’, remains unresolved. MeitY had earlier, in affidavits before the High Courts, consistently stated that is not within its purview and power to legislate on the subject and that rests solely on the states. Therefore, the introduction of the Draft without consultation and consensus amongst states seems not quite in line.

The ambiguity further extends to a lack of clarity on whether the Draft bans ‘gambling’. While IT Minister, Rajeev Chandrasekhar stated that “online games that allow wagering on the outcome are effectively a no-go area” there is no clear prohibition on ‘gambling’. The Rules only state, as a part of due diligence, online gaming intermediaries shall make reasonable efforts to ensure that online gaming platforms do not contravene any gambling or betting laws in India, which again differs from state to state.

An online game has been defined in the Draft as a “game that is offered on the Internet and is accessible by a user through a computer resource if he makes a deposit (in cash or in-kind) with the expectation of earning winnings”- In the absence of a definition of “gambling” and “betting” in the Draft and clarity on which category of games are sought to be regulated if the online game for consideration is sought to be regulated on one hand and gambling or betting content is prohibited on the other hand, remains a question[3]. While it may be assumed that the ‘kind’ component in the definition has been introduced to cover ‘non-monetary token’ or ‘online gaming currencies’, it may lead to the consequence where games that do not require any monetary incentive may also be included within the meaning of online games here. The definition can almost broadly cover all ‘gambling games’ within the purview of ‘makes a deposit (in cash or in-kind) with the expectation of earning winnings’. Would that mean that ‘gambling’ is brought within the purview of these Rules?

The Draft classifies online gaming platforms as ‘intermediaries’. Our understanding of the term ‘intermediary’ includes one that acts on behalf of another entity. However, in the case of online gaming platforms, we notice that most of them publish the gaming content themselves and do not host games on behalf of another. In view of the above, in an earlier debate, a government task force submitted a study stating that gaming platforms should be categorized as ‘publishers’ and not as ‘intermediaries’[4]. The question that remains unanswered is why we now bring online platforms within the purview of intermediaries thereby giving them passage to ‘safe harbour protection’ under Section 79 of the IT Act.

Apart from the few above-mentioned points, the Draft may expect push-back from various industry stakeholders on the Government’s over-arching power on issues of revocation of registration of self-regulatory bodies and exercising regulatory power for KYC. It is to be observed therefore how MeitY resolves the already existing issues on the IT Rules pending before the courts and accordingly brings about an amendment to the current online gaming Draft Rules catering to the purpose it mentioned in its notes[5] accompanying the Draft Rules.

An online game has been defined in the Draft as a “game that is offered on the Internet and is accessible by a user through a computer resource if he makes a deposit (in cash or in-kind) with the expectation of earning winnings”- In the absence of a definition of “gambling” and “betting” in the Draft and clarity on which category of games are sought to be regulated if the online game for consideration is sought to be regulated on one hand and gambling or betting content is prohibited on the other hand, remains a question.

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Rooh Afza has Immense Goodwill: Delhi HC Rules in Trademark Infringement Case

The Delhi High Court gave its verdict in the trademark infringement battle between Hamdard National Foundation (India) and Sadar Laboratories Pvt. Ltd., and prohibited the latter company from using the mark “DIL AFZA” thereby protecting the trademark “ROOH AFZA”.

In a suit for trademark infringement by Hamdard National Foundation (India) against Sadar Laboratories Pvt. Ltd., the Delhi High Court held that the trademark “ROOH AFZA” possesses immense goodwill and that competitors must ensure that their marks are not similar to it. A two-judge bench, in its judgment[1] held that since the mark “ROOH AFZA” has been used for over a century, it can be considered a strong mark and, thus, restrained the Respondent from using the mark “DIL AFZA” until the suit is disposed of.

Hamdard National Foundation has filed the present appeal against the order[2] passed by a single judge bench of the Delhi High Court on 6th January 2022, rejecting an application for an interim injunction against Sadar Laboratories Pvt. Ltd. Both the marks are used with respect to sweet beverage concentrate. The Appellants claimed that the Respondents were infringing their marks “HAMDARD” and “ROOH AFZA”, and by selling these products under the mark “DIL AFZA,” they were passing off their products as those of the Appellants.

The Single Judge Bench held that the Appellants have to show that “AFZA” has a secondary meaning to claim exclusivity of their product. Therefore, the Court dismissed the application on the ground that they can claim exclusivity only for the mark “ROOH AFZA” as a whole and not just for “AFZA.”

Aggrieved by the order, the present appeal was filed by Hamdard National Foundation seeking a permanent injunction refraining the respondents from using the mark “SHARBAT DIL AFZA” or “DIL AFZA” on the ground that it is deceptively similar to the mark “ROOH AFZA.” The appellants further claimed that the use of this mark would deceive consumers and amount to passing off and also submitted that this would amount to dilution of the Appellant’s mark.

It was claimed that the marks “HAMDARD” and “ROOH AFZA” have been used for a wide range of products and constitute a well-known mark under Section 2(zg) of the Trademarks Act, 1999 owing to their widespread reputation and has therefore acquired goodwill with respect to the class of products pertaining to sweet beverage concentrates.

The Respondent submitted that by virtue of Section 29 of the Trademarks Act 1999, the allegations of infringement are not maintainable. It was submitted that the Appellants do not have an exclusive right over the word “AFZA” and that their mark has been coined by joining the terms “DIL” and “AFZA” and are not phonetically or visually similar. The Respondent submitted that there was no possibility of confusion between the two marks and every other aspect, such as the design and color scheme of “DIL AFZA” is also materially different from the Appellant’s mark. Therefore, there was no possibility of confusion between the two marks.

The Delhi High Court, after considering the arguments from both sides, stated that “AFZA” is an integral part of both “ROOH AFZA” and “DIL AFZA.” The word is neither descriptive nor normally associated with the product; hence, it is material in determining whether there is an infringement of the trademark. The Court further stated that the use of the word “AFZA” lends a certain degree of similarity, and the trade dress of both products is also similar, making the Respondent’s mark deceptively similar to that of the Appellants.

The Court reiterated that “ROOH AFZA” has been used for over a century and is entitled to protection. The mark is a source identifier with a high degree of goodwill and is susceptible to unfair competitive practices. The Court stated that prima facie, the Respondent’s mark lacks a sufficient degree of dissimilarity and hence set aside the order passed by the Delhi High court and passed an ad interim order restraining the Respondent from manufacturing and selling any product under the mark “DIL AFZA” belonging to Class 32 until the present suit is disposed of.

References:

[1] Hamdard National Foundation (India) & Anr vs Sadar Laboratories Pvt. Ltd. [Case No. FAO(OS) (COMM) 67/2022]

[2] Hamdard National Foundation (India) & Anr vs Sadar Laboratories Pvt. Limited [Case No. CS (COMM) 551/2020]

Image Credits:

Photo by Jessica Lewis: https://unsplash.com/photos/qscDBbXBGiI?utm_source=unsplash&utm_medium=referral&utm_content=creditShareLink

The Delhi High Court, after considering the arguments from both sides, stated that “AFZA” is an integral part of both “ROOH AFZA” and “DIL AFZA.” The word is neither descriptive nor normally associated with the product; hence, it is material in determining whether there is an infringement of the trademark. 

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Generative AI: Generating Legal Headaches?

The year 2022 saw major breakthroughs in the field of generative Artificial Intelligence. This field is different from the more traditional “discriminatory” AI models, whose algorithms rely on the datasets they are fed during “training” to make decisions. By contrast, “generative” AI models are forced to make conclusions and draw inferences from datasets based on a limited number of parameters given to them during training. In other words, generative AI uses “unsupervised” learning algorithms to create synthetic data. The output of generative AI includes digital images and videos, audio, text or even programming code. In recent days, even poetry, stories, blog posts and art work have been created by AI tools 

Generative AI: The Socio-Economic and Legal Problems

Like every technology, generative AI too has pros and cons. While it has made it easy to create various kinds of content at scale and in much shorter timeframes, the same technology has also been used to create “deep fakes” that then go viral on social media.  

OpenAI’s image generator platform “DALL-E 2” and automatic text generator GPT-3 have already been used to create art work and other text-based content. GPT-4, which is expected to be far more powerful and advanced, is expected to be released in 2023. Until recently, Open AI did not allow commercial usage of images created using the platform. But it has now begun to grant “full usage rights”- which includes the rights to sell the images, reprint them and use them on merchandise.  

Generative AI has the potential to open a Pandora’s Box of litigation. A class action suit has already been filed against OpenAI, Microsoft and Github alleging copyright violations by Copilot, Github’s AI-based code generator that uses OpenAI’s Codex model. The argument behind the suit is this: the tool uses hundreds of millions of lines of Open-Source code written, debugged, or improved by tens of thousands of programmers from around the world. While these individuals support the Open- Source concept, code generators like Copilot draw on their code (which was fed to it during its training) to generate code that may well be used for commercial purposes. The original authors of the code remain unrecognized and do not get any compensation.  

A similar situation can easily occur with art work created using AI-based tools because all that such tools need to create a digital image is a text prompt. For example, Polish artist Greg Rutkowski, known for creating fantasy landscapes, has complained about the fact that just typing a simple text like “Wizard with sword and a glowing orb of magic fire fights a fierce dragon Greg Rutkowski” will create an image that looks quite close to his original work. The smarter text recognition and generative AI get, the simpler it will be for even lay people to use. Karla Ortiz, a San Francisco based illustrator is concerned at the potential loss of income that she and her fellow professionals might suffer due to generative AI.[1]

 Sooner than later, this challenge will be faced by playwrights, novelists, poets, photographers and pretty much all creative professionals. Indeed, AI tools could conceivably put writers out of business in the next few years! AI generators are “trained” using millions of poems, images, paintings etc that were created by persons dead or alive. Their creators or their legal heirs do not currently have the option to exclude their works from the training datasets. In fact, they do not even usually know that their works have been included.  

The creative industry itself is taking various steps to protect the rights of various categories of creative professionals. Such measures include the use of digital watermarking for authentication, banning the use of AI-generated images, and building tools that allow artists to check if their works have been used as part of any training datasets and then opt out if they so choose.  

A more pernicious problem could conceivably arise when deliberately or inadvertently, misleading content is created and posted- and consumed by innocent users. Some early examples of such misuse have already emerged, and there is a genuine concern that if these activities are not nipped in the bud and information on the internet is not somehow authenticated, serious, unexpected, and large-scale damage may be caused.  

Overhauling the Laws

In the US, AI tools may, for now, take legal cover under the fair use doctrine. But that applies only to non-commercial usage. Arguably, the current situation where researchers and companies building AI tools freely use massive datasets to “train” their tools violate the spirit of ownership and protection of IPR because these AI generators are also being used for commercial benefit. Also, as various lawsuits are already underway, changes to IPR and related laws will need to be made to explicitly enable AI. Not doing so will only impede the use of AI in various fields where such algorithms can deliver significant benefits by speeding up innovation.  

References:

[1] https://www.technologyreview.com/2022/09/16/1059598/this-artist-is-dominating-ai-generated-art-and-hes-not-happy-about-it/

Image Credits:

Photo by Tara Winstead: https://www.pexels.com/photo/robot-fingers-on-blue-background-8386369/

Like every technology, generative AI too has pros and cons. While it has made it easy to create various kinds of content at scale and in much shorter timeframes, the same technology has also been used to create “deep fakes” that then go viral on social media.  

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Impact of Work from Home and Rise of Coworking Spaces on the Bengal Real Estate Sector

The COVID-19 pandemic had forced the world to undergo an overnight change with respect to the way it conducted both its personal and professional lives. It brought about boom in some industries, such as e-commerce, ed-tech, etc. and stagnation in others such as travel, hospitality, etc. The real estate industry also underwent some drastic changes, which has affected various stakeholders.

Encouraging Government Interventions

In the recently convened National Conference of Labour Ministers of all States and Union Territories, the Prime Minister said that “flexible workplaces, a work-from-home ecosystem, and flexible work hours” are the needs of the future. Another development with a similar vision of flexible workplaces was the Special Economic Zones (Third Amendment) Rules, 2022 and the Special Economic Zones (Fifth Amendment) Rules, 2022.

On 14th July, 2022, notification no. G.S.R. 576(E) was published by the Ministry of Commerce and Industry, Government of India promulgating the Special Economic Zones (Third Amendment) Rules, 2022, which permitted work from home for Special Economic Zone (“SEZ”) employees and solidified the legal framework of work from home and remote working. By this notification, Rule 43A was added to the SEZ Rules, 2006 which enabled employees (including contractual employees) to work from home or from any other place outside the SEZ up to a maximum of fifty percent of the total employees of the SEZ Unit. It extends to employees of the IT and ITes SEZ units, employees who are temporarily incapacitated, employees who are travelling and also employees who are working offsite. In order to avail itself of this, the SEZ Unit had to submit its proposal for working from home to the Development Commissioner through email or physical application at least 15 days in advance.

However, on 8th December 2022, the Ministry published another notification bearing no. G.S.R. 868(E), bringing about the Special Economic Zones (Fifth Amendment) Rules, 2022, which granted further relaxations to the SEZ work from home norms. By virtue of this amendment, the percentage of employees who can work from home has been increased from 50% to 100% till 31st December 2023. It is also no longer mandatory to get prior approval of the proposal for work from home, and the SEZ unit owners are only required to intimate the same to the Development Commissioner.

Due to pandemic/lockdowns, most officegoers started working from home or remotely. Although remote working existed even before the pandemic, especially among freelancers, it was because of the pandemic that most businesses were forced to adapt to this mode of working even for full-time employees. Although the world is back to normal at present, both employers and employees are refusing to go back to the traditional office setup. The December 8, 2022 notification will now further encourage IT companies and their employees to opt for work from home in the SEZs.

 

Increase in Demand for Residential Spaces & Shifting of People to Tier 2 And Tier 3 Cities

Another interesting trend that has come out of this pandemic is the increase in demand for bigger residential spaces, including luxurious and semi-luxurious apartments. As per the reports of CREDAI, Bengal, the sales of 2 BHK apartments have gone down from 48% in 2019 to 40% in 2021, while on the other hand, sales of 3 BHK apartments have gone up significantly from 44% in 2019 to 54% in 2021. The sales of 4 BHK apartments have also more than doubled during the same period, going up from 2% in 2019 to 4.7% in 2021. This increase in demand for luxurious residences has taken place since individuals who work from home prefer an apartment with a home office, and therefore, they are leaning towards larger residential spaces.

 

The demand for residential real estate is highly dependent on where people go to work, as people prefer to live near their workplaces in order to minimise travel. Now that a large group of people are not required to physically to work regularly, they are shifting to tier 2, tier 3 cities and suburban areas from the metro areas as these places offer affordable housing options and a better standard of living at a lower cost. The tier 2 cities across India have witnessed healthy investment in residential real estate in recent years, with more residential project launches by developers.

 

Rise of Co-Working Spaces

As a result of the change in mindset of employers and employees, a new form of commercial real estate has gained popularity recently, namely, “co-working spaces.” A lot of companies, especially small businesses and start-ups have opted for this model across India instead of investing in individual spaces, as it offers both cost-effectiveness and flexibility. Some of the reputed coworking spaces, such as Colliers, Awfis, Coworks have already set up spaces in different cities across India. Due to this huge demand for coworking spaces, companies such as Awfis, Workport Coworking, East India Works Eden, My Cube and Seamus Management have already set up coworking spaces in Kolkata.

 

Future Trend

Now that offices are transitioning from work-from-home models to hybrid models and some workplaces are also calling their employees back to the office, the demand for office space and coworking space transactions has started to pick up again. Although the employees of the IT/ITeS sector in SEZs still have the liberty to work from home, most employers in other sectors have mandated that employees come back to the office. It will be interesting to see if the volume of rentals and leasing in office spaces goes back to the pre pandemic conditions or is affected by the rise of “co working spaces” and the new notification dated December 8, 2022 allowing 100% work from home in SEZs until December 31, 2023.

 

Now that offices are transitioning from work-from-home models to hybrid models and some workplaces are also calling their employees back to the office, the demand for office space and coworking space transactions has started to pick up again. Although the employees of the IT/ITeS sector in SEZs still have the liberty to work from home, most employers in other sectors have mandated that employees come back to the office. 

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Can Environment Protection and Economic Development Go Hand-In-Hand?

Sustainable development is an organising principle for meeting human development goals while also sustaining the ability of natural systems to provide natural resources and preserve the ecosystem services on which the economy and society depend. It is the duty of the State to implement a coherent and coordinated program in which economic development should not be allowed to take place at the expense of our natural resources.

With the principle of sustainable development in mind, the Hon’ble Supreme Court (“Hon’ble SC”) issued a decision on 03.06.2022 in the case In Re: T.N. Godavaraman Thirumulpad vs. UOI & Others[1] to categorically lay down the extent of Eco-Sensitive Zones (“ESZ”) that surround protected forest lands. Strict rules have been laid down with the intention of ensuring that development and preservation of the environment go hand in hand.

What is Eco-Sensitive Zone (ESZ)?

Fragile areas surrounding protected forest lands are known as eco-sensitive-zones (“ESZ”), otherwise known as “shock-absorber” or “transition zones,” and the extent of the ESZ for each protected forest land is declared by the Ministry of Environment, Forestry and Climate Change (“MoEF&CC”). The ESZ for each protected forest is a vital element for preserving and protecting the environment from hazardous activities.

In the year 2002, a ‘Wildlife Conservation Strategy-2002’ was adopted in the meeting of the National Board for Wildlife, wherein lands falling within 10 kms of the boundary of each protected forest land were to be declared ESZ and the Chief Wildlife Wardens of every State were requested to list out areas that fall within 10 kms of the boundaries of the protected forest lands. However, in response, several State Governments raised issues over the applicability of the 10 km rule as certain protected forest lands were located in urban areas, which had an uninterrupted flow of development.

Guidelines For Eco-Sensitive Zone (ESZ)

 

Taking into account the concerns raised by the state governments, the MoEF and CC issued a guideline on February 9, 2011 to ensure that development does not come at the expense of the environment and vice versa.

 

In a nutshell, the rules laid down in the Guidelines specifying the extent of each ESZ are as follows:

  • As provided in the Wildlife Conservation Strategy, 2002, the extent of an ESZ can go up to 10 kms.
  • In areas with delicate ecosystems and connecting habitats that suit the needs of a full suite of native animals and plants and are beyond 10 km in width, these shall be included in the ESZ.
  • In the context of a particular Protected Area that is specifically designated by the State Government, the area of the ESZ could be of variable width and extent.

Irrespective of the above guidelines, issues were still being raised before the Hon’ble Supreme Court, seeking modification of the restrictions pertinent to ESZ.  

Observations of Hon’ble Supreme Court

To put the question of ESZ to rest once and for all, the Hon’ble SC in the case In Re: T. N. Godavaraman Thirumulpad vs. UOI & Other, passed an order (“June Order”) that extensively dealt with ESZ and the activities permitted therein. The relevant directions that were laid down in the June Order are as follows:

  1. Each protected forest land must have an ESZ of at least 1 km measured from the protected forest land’s demarcated boundary.
  2. When the ESZ that is already prescribed by law goes beyond 1 km, the wider margin of the ESZ shall prevail.
  3. The minimum width of the ESZ may be diluted with the approval of the Central Empowered Committee, MoEFF & CC, and the Hon’ble SC.
  4. A 10 km buffer zone (ESZ) is to be implemented for any sanctuary or national park for which no proposal has been submitted.

It is noteworthy to mention that the Hon’ble Supreme Court had also observed that the above-mentioned directions may not be feasible for all sites, such as Sanjay Gandhi National Park in Mumbai (“SGNP”), Gandhi National Park in Mumbai (“GNP Mumbai”), and Gandhi National Park in Chennai (“GNP Chennai”), as these sites have gone through tremendous development in close vicinity and are located in urban areas.

However, because the Hon’ble Supreme Court’s observations on special cases were left vague, causing uncertainty, the aforementioned order had a disastrous effect on the Mumbai real estate industry, halting construction in areas surrounding the SGNP and directing local authorities to cancel Commencement Certificates issued to builders.

Subsequently, the CREDAI-Maharashtra of the Housing Industry had filed an Interim Application[1] before the Hon’ble SC, seeking clarification on the applicability of the 1 km rule in special cases such as SGNP. The Hon’ble SC had clearly set forth in the Interim Order that the directions laid down in the June Order are not applicable to special cases as a 1 km wide “no development zone” may not be feasible in all cases. Further, the Hon’ble SC mentioned that specific exceptions with regard to SGNP and GNP Mumbai had already been made in the June Order.

 

Present Situation of Guindy National Park, Chennai

GNP, Chennai, is a habitat for faunal species and the city’s vital lung, with a land area of 270.57 hectares (ha) and was designated as a Forest Reserve land in 1978, when it was known as the “Guindy Deer Park.” Right from the begining, GNP has been a tourism attraction point surrounded by numerous buildings such as the Gandhi Mandapam, IIT, Cancer Institute, Rajaji Memorial Historical Monument, etc. All of this being a source of pride, GNP has recently become a source of contention in discussions about sustainable development.

On application of the aforementioned Interim Order of the Hon’ble SC, it can be presumed that the ‘1km rule’ laid down in the June Order is inapplicable to GNP Chennai as it has been carved out as a “Special Case”. The relevant portion of the June Order is extracted hereinbelow, for ease of reference.

“We have considered CEC’s recommendation that the ESZ should be relatable to the area covered by a protected forest but the Standing Committee’s view that the area of a protected forest may not always be a reasonable criterion also merits consideration. It was argued before us that the 1 km wide “no development zone” may not be feasible in all cases and specific instances were given for Sanjay Gandhi National Park and Guindy National Park in Mumbai and Chennai metropolis respectively which have urban activities in very close proximity. These sanctuaries shall form special cases.”

However, in pursuance of the June Order, a PIL[2] has been filed by a Social Activist before the Hon’ble High Court, Madras seeking to demolish the headquarters of the Tamil Nadu Forest Department that has been constructed close to GNP Chennai with the alleged intention to protect and preserve the habitat.

An affirmation of the June Order by the Hon’ble High Court, Madras, would therefore dispel all ambiguity with regards to the rules applicable to GNP Chennai and provide the necessary clarification on what path the real estate industry in Chennai could embark on.

References: 

[1] W.P. (Civil) No. 202 of 1995 dated 03.06.2022

[1] I.A. No. 110348 of 2022 dated 23.09.2022.

[2] W. P. No. 27372 of 2022

Image Credits: Photo by Amit Jain on Unsplash

The Hon’ble Supreme Court’s observations on special cases were left vague, causing uncertainty and it had a disastrous effect on the Mumbai real estate industry, halting construction in areas surrounding the Sanjay Gandhi National Park in Mumbai (“SGNP”) and directing local authorities to cancel Commencement Certificates issued to builders.

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Private Sector Fuels India’s Space Economy

The Indian National Space Promotion and Authorization Centre (IN-SPACe) was set up in 2020 as an independent body to oversee regulation of all space related activities in India, including the authorization of private rocket launches. The government’s decision to allow the private sector into India’s space sector was aimed at broad-basing innovation capabilities and speeding up India’s ability to compete in the global market for space technologies- a high-growth market that has historically been dominated by a small number of players from the US and Europe.

This decision seems to be paying off, because India’s private sector has already become quite active across the value chain in the space sector. Nearly 300 entities are already registered with IN-SPACe, of which 30% are startups. On 18th November 2022, Vikram-S, a small single-stage rocket developed by Hyderabad-based startup Skyroot Aerospace, was successfully flight tested. This marks the beginning of “Prarambh”, the company’s sub-orbital mission. By year-end, Chennai-based Agnikul Cosmos expects to launch its small rocket too. Pixxel, another space startup, has already launched Shakuntala, India’s first privately built earth imaging satellite and a second satellite Anand. A consortium of L&T and HAL has been awarded a contract to build five PSLVs. This is the first time anyone other than ISRO has been tasked with this key responsibility- an indication of the government’s rising confidence in our private sector. The success is testament to the robust space sector ecosystem being built as a result of close collaboration between ISRO, IN-SPACe, academic institutions, and the private sector (both startups and established companies).

 

Why the Private Sector is Important for India’s Space Economy?

The capability to launch small rockets is critical because smaller rockets can place their payloads in more precise orbits. Also, they can be produced in shorter timelines by using 3D printing technologies. Miniaturization of components means that required functional capabilities can be achieved through smaller satellites. All this means that satellites with specific functional capabilities can be quickly assembled and launched. Smaller rockets can be easily fueled by liquid propellants, which are inherently easier to manage; they are also less prone to vibrations, which can become a challenge for launch vehicles that carry sensitive payloads.

Given rising geopolitical uncertainties, there is now a higher risk of conflicts between countries arising at short notice. Increasingly, wars will be fought using cyberattacks and directed energy weapons to degrade the enemy’s vital assets such as communication satellites and missile defence batteries. Swarms of weaponized drones too will be deployed to target and destroy vital military installations in remote, hard-to-access areas. In such a scenario, it becomes critical that as a country we can launch new satellites and other space assets quickly to replace lost capacities or augment and complement new space-based capabilities that are needed.

ISRO has successfully designed, developed, and launched heavy, multi-stage rockets into space. These technologies/capabilities have helped place many satellites in orbit and in turn, these are playing a key role in India’s development. ISRO has also developed the SSLV (Small Satellite Launch Vehicle), but unfortunately, its technology demonstration mission failed earlier this year. It is this gap that the private sector can help plug at short notice.

 

Public-Private Cooperation is Vital to Power India’s Space Economy

As various countries seek to build/enhance their space-based defence capabilities, countries like India can benefit from commercial contracts to launch satellites/other payloads and conduct defence missions in space. With defence capabilities increasingly relying on assets deployed in space, the evolution of India’s private sector space capabilities will also boost our credibility as a builder of solutions and not just as a provider of reliable, cost-effective space launch services. While ISRO continues to build its reputation as a reliable partner, it needs to scale up its ability to launch satellites for its customers. In October 2022, ISRO successfully launched 36 satellites for UK-based OneWeb (partly owned by the Bharti group), marking the use of the LVM3 rocket; this was also one of ISRO’s largest commercial orders. More such opportunities can come ISRO’s way because satellite-based internet services are rapidly becoming cost-competitive and an easy way to deliver connectivity to far-flung areas where building fibre-based infrastructure is difficult due to terrain and weather conditions.

It is estimated that by 2025, India’s space business will grow to US$12.8 Billion from US$9.6 Billion in 2020 (source: https://timesofindia.indiatimes.com/india/how-indias-space-startups-are-aiming-high/articleshow/95637043.cms). ISRO is a shining example of a public sector entity that has consistently overcome huge odds (including sanctions from time to time) to indigenously develop world-class capabilities in frontier areas like space technologies. Its ability to do much more has arguably been limited by budgetary support. And although launches are the most visible part of a space economy, they are by no means the only facet: design, development, manufacturing, building technology demonstration prototypes etc. are all just as important. Now, with the innovative energies and other resources available to the country’s private sector, significant synergies can be unleashed through public-private partnerships in the space sector.

References: 

Image Credits: Photo by Pixabay: https://www.pexels.com/photo/space-technology-research-science-41006/

With defence capabilities increasingly relying on assets deployed in space, the evolution of India’s private sector space capabilities will also boost our credibility as a builder of solutions and not just as a provider of reliable, cost-effective space launch services. While ISRO continues to build its reputation as a reliable partner, it needs to scale up its ability to launch satellites for its customers.

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Enhancing Business Responsibility of India Inc. Through ESG Disclosures

The global community is negotiating ways to manage climate change and mitigate its impact while ensuring that there is no adverse effect on employment, food security or the living standards of the masses. Addressing climate change is one of the most urgent tasks, particularly for a developing India, which is already bearing the harsh consequences like water shortages, extreme weather events such as floods, coastal erosion, droughts, rising temperatures, anarchical expansion of unregulated industrial growth and other climate affecting events.

On top of it, what is rarely spoken about is another silent killer – fast expansion of concretization, which by itself is a by-product of uncontrolled urbanisation due to the lackadaisical approach of civic agencies. India is decades away from its peak in terms of economic growth and energy consumption, but India’s energy demand is estimated to grow faster than any other country over the next few years. India, a developing country of more than 1.3 billion people, is the world’s third-largest emitter of carbon dioxide after the US and China.

In this background, speaking at the 26th United Nations Climate Change Conference, more commonly referred to as COP26, held in Glasgow in October – November 2021, our hon’ble Prime Minister, Sri. Narendra Modi made five key pledges for how India would decarbonise over the next few decades. He had pledged that India would reach net zero-emissions by 2070.  

 

Broadly, ESG stands for Environmental, Social, and Governance and refers to the three key factors when measuring the sustainability and ethical impact of an investment in any business or industry. The term “environmental” includes carbon emissions, air and water pollution, deforestation, green energy initiatives, waste management, and water usage. The term “social” includes employee gender and diversity, customer satisfaction, corporate sexual harassment policies, human rights at home and abroad, fair labour practices, etc. The term “’governance” includes data protection, privacy, security, transparency, business ethics/values, anti-corruption and anti-bribery policies.

The Financial Times Lexicon defines ESG as “a generic term used in capital markets and used by investors to evaluate corporate behaviour and to determine the future financial performance of companies.” Broadly, the term ESG refers to the examination of a company’s environmental, social, and governance practices, their impacts on the company’s performance, ability to execute its business strategy, create long-term value, and the company’s progress against benchmarks.  

In response to this need, there has been a greater emphasis among investors and stakeholders on businesses that are responsible and sustainable in terms of the environment and society. As such, reporting on a company’s performance on sustainability-related factors has become as vital as reporting on its financial and operational performance. Modern business organisations are now being motivated by more than just profit-oriented strategies and revenue-generating objectives. Sustainability has become an integral aspect of corporate branding and shareholder expectations. ESG, used interchangeably with sustainability based on quantitative or semi-quantitative data, is about pursuing responsible and ethical business practices with attention to social and environmental equity along with economic development. The term “sustainability” is broadly used to indicate programs, initiatives and actions aimed at the preservation of a particular resource. However, it also refers to four distinct areas: human, social, economic and environmental – known as the “four pillars of sustainability”.

The policies adopted by Indian regulators over the past years also indicate that India has made an aggressive move towards decarbonisation to adopt sustainable ways of doing business. India is one of the first countries to demand ‘ethical’ commitments from corporations and industries. In 2013, Corporate Social Responsibility was mandated in India within the Companies Act of 2013, as was suggested in the National Voluntary Guidelines (NVGs) on Social, Environmental and Economic Responsibilities of Business in 2011. The Companies Act, 2013 introduced one of the first ESG disclosure requirements for companies. Section 134(m) mandates companies to include a report by their Board of Directors on conservation of energy with their financial statements and is further detailed under Rule 8(3)(A) of the Companies (Accounts) Rules, 2014, which mandates the board to provide information regarding conservation of energy.

 

SEBI’s Role in Mandating ESG Disclosures

 

There may not yet be any single, comprehensive and stringent enactment governing the entire subject with all checks and balances, but SEBI (Securities and Exchange Board of India) has taken on the role of implementing an efficient ESG policy. As far back in November 2015, SEBI issued a circular prescribing the format for the Business Responsibility Report (BRR) with respect to reporting on ESG parameters by listed entities. The top 500 listed companies in India were instructed by SEBI to disclose indicators of business responsibility and sustainability through Business Responsibility Reporting (BRR). Companies were mandated to include disclosures on opportunities, threats, risks, and concerns as part of their annual reports under Regulation 34(3) of the SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015 (LODR Regulations).

In 2017, SEBI issued a circular on ‘Disclosure Requirements for Issuance and Listing of Green Debt Securities’ (also known as Green Bonds) to introduce the regulatory framework for the issuance of green debt securities in India and enhance investor confidence. It supplements the SEBI (Issue and Listing of Debt Securities) Regulation, 2008 and envisages a list of disclosures that an issuer must make in its offer document before and after commencement of a project financed by green debt. These additional disclosure requirements have been prescribed to attract the finance reserved for ESG-compliant projects, such as renewable energy and sustainable energy, clean transportation, sustainable water management, climate change adaptation, energy efficiency, sustainable water management, sustainable land use and biodiversity conversion. 

To further strengthen the ESG disclosure regime in India, SEBI amended Regulation 34(2)(f) of the LODR Regulations and on May 10, 2021, SEBI issued another circular detailing new sustainability-related reporting requirements on ESG parameters called the Business Responsibility and Sustainability Report (BRSR) to replace the existing BRR and place India’s sustainability reporting on par with the global reporting standards. The BRSR is intended to have quantitative and standardized disclosures on ESG parameters. Such disclosures will be helpful for investors to make better investment decisions and also enable companies to engage more meaningfully with their stakeholders by encouraging them to look beyond financials and towards social and environmental impacts.

The filing of BRSR after the implementation of new norms has been stipulated as mandatory for the top 1000 listed companies (by market capitalization) for the financial year 2022-23 but voluntary for the financial year 2021-22, to provide the companies with sufficient time to get used to new reporting compliance/regulations. The BRSR seeks continuous disclosures from listed entities on their performance and is aligned with the nine principles of the ‘National Guidelines for Responsible Business Conduct’ (NGBRCs). Adoption of BRSR is yet to pick up pace because of the detailed nature of disclosures required in BRSR. To speed up the process, in a Press Release on May 6, 2022, SEBI constituted an advisory committee on ESG matters in the securities market to create faster momentum.

In respect of non-listed companies however, there is currently no law that mandates that such companies be subject to mandatory ESG disclosure or reporting requirements. However, it can be expected that once the scheme is fully implemented where it is comparatively easier to regulate, it will certainly cover other companies as well as industries in unorganised sectors.

ESG disclosures are highly significant and relevant for all prospective stakeholders involved in business for reasons briefly described as follows.

  • Investors – If a business is not conscious of sustainability, there are chances of it becoming redundant in the future due to legal and regulatory changes prohibiting certain ways of doing business or decreasing demand for business products or deteriorating services. This aspect would certainly motivate the investor’s focus while investing.
  • Businesses – ESG disclosures identify potential transition risks, assess future viability, and take the necessary steps to adapt to likely future changes. Companies that are not aware run the risk of losing profit-making capacity as well as market reputation.
  • Consumers – ESG disclosures also help conscious consumers identify responsible businesses that not only concentrate on profit maximisation but also growth in a responsible manner. Accordingly, the disclosures become part of a marketing strategy to attract more consumers.

ESG goals are a set of standards for a company’s operations that force companies to follow better governance, ethical practices, environment-friendly measures, and social responsibility. They are used by socially conscious investors to screen potential investments. Environmental criteria consider, for example, how a company performs as a steward of nature, safeguards the environment, including corporate policies addressing climate change. Companies with better ESG performance have a better track record on issues such as human rights, climate change, environmental sustainability, social responsibility, ethics, and transparency, and hence are more resilient against future risks. It has become absolutely essential for companies to have comprehensive ESG policies in place.

In conclusion, to quote our Hon’ble Prime Minister, “The decisions taken in Glasgow will safeguard the future of generations to come and give them a safe and prosperous life.”  

The policies adopted by Indian regulators over the past years also indicate that India has made an aggressive move towards decarbonisation to adopt sustainable ways of doing business. India is one of the first countries to demand ‘ethical’ commitments from corporations and industries. 

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