Sustainability Reporting In India Under SEBI’s BRSR Framework – A Primer

The Securities and Exchange Board of India (SEBI) recently introduced new requirements for sustainability reporting by the top-1000 listed Indian entities by market capitalization in a new format called the Business Responsibility and Sustainability Report (BRSR). The companies to which the new requirement applies need to disclose their material Environmental, Social, and Governance (ESG) risks and opportunities, their approach to mitigate the risks or adapt to them, and the financial implications involved in this process.

Reporting in the BRSR framework is designed to increase the transparency of corporate disclosures and help market participants examine sustainability-related risks and opportunities. Disclosures under the BRSR framework are meant to be more robust and cover a broader spectrum compared to other ESG reporting frameworks because BRSR requires robust information relating to social metrics, apart from data about employees, communities, and consumers.

For the fiscal year 2021-22, reporting under the BRSR framework was voluntary for the top-1000 listed companies in India by market capitalization. From the fiscal year 2022-23, compliance with BRSR requirements is mandatory for the top-1000 companies and voluntary for other listed companies, including those that have listed specified securities on the Small and Medium Enterprises (SME) exchange.

BRSR framework is based on 9 basic principles of the National Guidelines on Responsible Business Conduct (NGRBC) which pertain to businesses being ethical, transparent, and accountable, provisioning goods and services in a sustainable manner, ensuring the well-being of employees – including those in their value chains, being protective of the environment and mindful of sustainable production, responsive to all stakeholders, promoting human rights, complying with the regulatory framework, promoting inclusive growth and facilitating equitable development and consumer welfare. The BRSR framework collects information from businesses on each of these principles.

The information companies must disclose using the BRSR framework covers all aspects of ESG. It includes information on the risks and opportunities that arise from environmental and social factors, the leadership’s reading of such risks and opportunities, strategies to mitigate and adapt in accordance with those risks and opportunities, and the financial implications of these actions.

BRSR framework is divided into three sections. General disclosures, Management, and Process disclosure, and Principle-wise performance disclosures.

General Disclosures

The general disclosures require companies to report data including general details of the organization, including…

  • Products and Services
  • Operational facilities
  • The markets it serves
  • Employees (Diversity; permanent or otherwise, etc)
  • Holding, subsidiary, and associate companies (including joint ventures)
  • Details of Corporate Social Responsibility (CSR) initiatives
  • Transparency and compliance issues
  • Overview of the entity’s material responsible business conduct issues*

*Overview of the entity’s material responsible business conduct issues includes identification of risks and opportunities from climate change and social matters, their rationale for identifying the risk or opportunity, approaches to adapt or mitigate those risks, and financial implications of the risk or opportunity.

Management And Process disclosure

These disclosures pertain to an organization’s structure, policies, and the processes in place to adopt NGRBC principles and core elements. It includes information related to governance, leadership, and oversight and incorporates a statement by the director responsible for the business responsibility report which highlights ESG-related risks, targets, and milestones.

Principle-wise Performance Disclosures

The BRSR framework collects information from businesses pertaining to the nine principles mentioned above. The principles govern how a business should conduct itself and how it should work with respect to environmental and social matters. The collected information is divided into two sections – essential indicators, which are mandatory, and leading indicators, which are voluntary.

Furthermore, the information needs to include an Environmental Impact Assessment (EIA) and Social Impact Assessment (SIA) of a company’s projects and/or products, the Scope 1 and 2 (direct and indirect) greenhouse gas emissions related to the projects and/or products, as well as resource allocation. Scope 3 emissions – those pertaining to the companies’ partners or suppliers – need to be reported on a voluntary basis.

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