BRSR – Reporting requirement for listed companies in India

Requirements of BRSR for listed companies in India

In the contemporary global business environment, the emphasis on sustainability and responsibility has grown significantly. Recognizing the need for transparency and accountability, SEBI introduced the Business Responsibility and Sustainability Reporting (BRSR) framework and its derivative, BRSR Core, alongside specific ESG disclosure requirements for value chains. These measures are aimed at fostering an environment of sustainable growth and responsible business conduct. Below, we outline the key aspects of these frameworks, their applicability, and considerations for assurance providers.

1. Business Responsibility and Sustainability Reporting (BRSR)

1.1 Overview

The BRSR framework emphasizes standardized disclosures on environmental, social, and governance (ESG) parameters, enabling comparability across companies, sectors, and time. This initiative helps stakeholders evaluate a company’s non-financial performance and its impact on society and the environment.

1.2 Applicability

1.3 Key Features

• Disclosures are based on the nine principles of the National Guidelines on Responsible Business Conduct (NGRBCs).
• Indicators are categorized into essential indicators (mandatory) and leadership indicators (voluntary).
• Entities already adhering to global sustainability frameworks (e.g., GRI, SASB, TCFD) may cross-reference their disclosures.
• Accompanied by a guidance note for interpretation and implementation.

1.4 Benefits

• Enhances comparability and transparency.
• Supports investors in informed decision-making.
• Encourages businesses to adopt a broader view of performance, incorporating social and environmental impacts.

2. 2. BRSR Core

2.1 Overview

BRSR Core is a focused subset of the BRSR, comprising key performance indicators (KPIs) under nine ESG attributes. It mandates reasonable assurance to ensure reliability and accuracy in disclosures.

2.2 Applicability

2.3 Assurance Requirements

• Reasonable assurance is mandatory for the KPIs listed in the BRSR Core.
• The methodology and any industry-specific adjustments must be disclosed.
• Cross-references to BRSR disclosures are included for ease of verification.

3. 3. ESG Disclosures for Value Chains

3.1 Scope and Applicability

• Encompasses top upstream and downstream partners comprising 75% of an entity’s purchases/sales (by value).
• KPIs in the BRSR Core should be reported for the value chain.
• Segregation of reporting for upstream and downstream partners is optional.
• Entities must clearly disclose the scope, assumptions, and estimates used in reporting.

4. Assurance Providers

4.1 Role and Expertise

The assurance provider’s role is to offer reasonable assurance on the accuracy and reliability of BRSR Core disclosures. The assurance provider must:

• Have expertise in sustainability and ESG reporting.
• Ensure adherence to globally recognized assurance standards.

4.2 Independence and Conflict of Interest

To maintain objectivity:

• • Assurance providers must not engage in non-assurance services (e.g., consulting) for the entity or its group companies.
  • The listed entity’s board must oversee the appointment and ensure the independence of the assurance provider.
  • Points to Consider for Listed Entities

• • 1. Alignment with Global Standards: Leverage existing sustainability reporting frameworks for compliance.
    2. Capacity Building: Train internal teams and partners to understand and implement BRSR requirements effectively.
    3. Data Integrity: Establish robust data collection, validation, and reporting systems.
    4. Stakeholder Engagement: Use disclosures to foster trust and meaningful dialogue with investors and other stakeholders.
    5. Transparency in Value Chain Reporting: Clearly articulate the scope and assumptions in value chain disclosures.

Conclusion

The introduction of BRSR, BRSR Core, and ESG disclosures for value chains marks a significant step towards embedding sustainability in corporate governance. By aligning with these requirements, listed entities not only ensure compliance but also demonstrate their commitment to responsible business practices, thereby enhancing stakeholder trust and long-term value creation.