In today’s corporate landscape, transparency and accountability are paramount. The Securities and Exchange Board of India (SEBI) introduced the Business Responsibility and Sustainability Report (BRSR) to enhance corporate disclosure on Environmental, Social, and Governance (ESG) parameters. This guide delves into the essence of BRSR, its criticality for Indian corporates, key components, recent SEBI updates, and the role of corporate reporting agencies in crafting impactful reports.

What is BRSR, and why is it critical for Indian corporates?

The BRSR is a structured reporting framework mandated by SEBI for the top 1,000 listed companies in India. It requires these entities to disclose their ESG initiatives and performance, thereby promoting responsible business conduct. By adhering to BRSR guidelines, companies can:

• Enhance Stakeholder Trust: Transparent reporting fosters confidence among investors, customers, and regulators.
• Align with Global Standards: BRSR aligns with international frameworks, positioning Indian companies on a global platform.
• Mitigate Risks: Identifying and managing ESG risks can prevent potential operational and reputational setbacks.

Key components and compliance requirements by SEBI

The BRSR framework is comprehensive, encompassing various facets of a company’s operations. Key components include:

1. General Disclosures: Information about the company’s profile, products, services, and markets served.
2. Management and Process Disclosures: Details on policies and processes related to the nine principles of the National Guidelines on Responsible Business Conduct (NGRBC).
3. Principle-wise Performance: Disclosures aligned with the NGRBC principles, covering areas such as ethics, product responsibility, employee well-being, and environmental stewardship.

SEBI mandates that these disclosures be made in a specific format, ensuring consistency and comparability across companies. The detailed format and guidance can be found in SEBI’s official documentation.

How BRSR contributes to ESG goals and investor confidence

Implementing BRSR enables companies to systematically report on their ESG initiatives, demonstrating a commitment to sustainable development. This transparency:

• Attracts Responsible Investment: Investors are increasingly considering ESG factors in their decision-making processes.
• Enhances Corporate Reputation: Companies showcasing genuine ESG efforts are viewed more favorably by stakeholders.
• Drives Long-term Value Creation: Sustainable practices lead to operational efficiencies and open new market opportunities.

Recent SEBI updates on BRSR

SEBI has implemented several significant updates to the BRSR framework, enhancing its effectiveness:

1. Introduction of BRSR Core and Industry Standards: In December 2024, SEBI introduced the ‘Industry Standards on Reporting of BRSR Core’ to standardize and simplify ESG disclosures. These standards provide detailed guidance on reporting metrics such as greenhouse gas emissions, water consumption, and waste generation, ensuring uniformity across companies.
2. Deferred ESG Disclosures for Value Chain Partners: SEBI has deferred the mandatory ESG disclosure requirements for value chain partners by one year, making them applicable from the financial year 2025-26. This extension allows companies additional time to gather data from their partners.
3. Revised Scope for Value Chain Reporting: The scope of value chain reporting now focuses on significant partners, covering those that constitute 2% or more of the entity’s purchases and sales by value. Disclosures can be limited to cover 75% of total purchases and sales by value, respectively.
4. Introduction of ‘Assessment or Assurance’ Terminology: SEBI has replaced the term ‘assurance’ with ‘assessment or assurance,’ allowing companies to choose between internal assessments or external assurance for ESG disclosures.
5. Inclusion of Green Credit Disclosures: A new leadership indicator under Principle 6 mandates companies to disclose green credits generated or procured by the company and its top 10 value chain partners. This initiative encourages active participation in environmental sustainability efforts.

Role of corporate reporting agencies in preparing impactful BRSRs

Navigating the complexities of BRSR requires expertise. Corporate reporting agencies play a pivotal role in:

• Ensuring Compliance: They help companies adhere to SEBI’s guidelines and stay updated with regulatory changes.
• Crafting Clear Narratives: Agencies assist in presenting ESG data in a coherent and compelling manner.
• Facilitating Assurance: They support the assessment or assurance process, enhancing the credibility of the reported information.
• Educating Stakeholders: Agencies conduct training sessions and workshops for stakeholders, including directors and senior management, to ensure a clear understanding of BRSR requirements and the importance of ESG disclosures.
• Data Collation Techniques: Reporting agencies employ advanced data collection and management methodologies, ensuring accurate and comprehensive ESG data from various departments and value chain partners.
• Regular Follow-Ups: Agencies maintain consistent communication with the company’s teams to ensure timely data submission, review, and updates.
• Workshops and Capacity Building: They organize capacity-building initiatives to familiarize internal teams with reporting requirements, ensuring a smoother and more informed reporting process.
• Strategic Recommendations: Agencies provide actionable insights to enhance the company’s ESG strategy, aligning it with both regulatory and stakeholder expectations.

By partnering with experienced corporate reporting agencies, companies can effectively communicate their ESG commitments and performance, thereby strengthening stakeholder trust and achieving their sustainability objectives.

Conclusion

In today’s competitive landscape, the BRSR framework is a significant step toward integrating sustainability into corporate governance in India. By understanding its components, staying abreast of regulatory updates, and leveraging the expertise of corporate reporting agencies, companies can not only ensure compliance but also drive meaningful impact in their ESG journey.