In recent times, adapting to and mitigating climate change impact, inclusive growth and transitioning to a sustainable economy have emerged as major issues globally. There   is an increased   focus   of investors and other   stakeholders seeking businesses to be responsible and sustainable towards the environment and society. Thus, reporting of company’s performance on sustainability related factors has become as vital as reporting on financial and operational performance.

The BRR is the first Environment, Social, and Governance (ESG) regulatory disclosure framework in India – it precedes the current Business Responsibility and Sustainability Reporting (BRSR) requirements.

SEBI vide Circular no. SEBI/HO/CFD/CMD-2/P/CIR/2021/562 dated May 10, 2021 mandated the filing of Business Responsibility and Sustainability Report (BRSR). According to amendment, SEBI (Listing Obligations and Disclosure Requirements) Regulations, the existing Business Responsibility Report (BRR) shall be replaced by a more detailed and comprehensive Business Responsibility & Sustainability Report (BRSR) in two phases:

  • Voluntary phase effective from FY 2021-22
  • Mandatory phase for the top 1000 companies effective from FY 2022-23 in a prescribed format specified by the SEBI.

The BRSR is accompanied with a guidance note to enable the companies to interpret the scope of disclosures.  The format of the BRSR and the guidance note are detailed in Annexure I and Annexure II respectively of above-mentioned Circular.

Disclosers under BRSR:

Section A: General Disclosure about the company

Section B: Management and process disclosure

Section C: Principle wise performance disclosure

Section A: General Disclosure about the company

Under this basic details of company shall be disclose such as, name, CIN, registered office, contact details, paid-up capital, name and contact details of the responsible person for BRSR, details about operation, production, turnover, details of employee, gender ratio of employee, representation of women at the top management and turnover ratio of the employees have to be disclosed.

The entity needs to identify and provide the details of high priority responsible business conduct and sustainability issues pertaining to environmental and social matters that present a risk or an opportunity to its business along with the rationale of identifying the risk/ opportunity, the approach of the entity to adapt or mitigate to such risk and also indicate the positive and negative impact of such risk or opportunity on the financials of the entity in qualitative terms (in case of previous years, impact can be disclosed in quantitative terms).

Business Responsibility & Sustainability Report

Topic Disclosure
Details of entity
  • Disclose name and contact details of the person who may be contacted in case of any queries on the BRSR report.
  • Disclose the reporting boundary i.e. whether the report is stand-alone or consolidated basis
Product/Services
  • Details of business activities and products and services sold by entity that account for 90% of entity’s turnover
  • Individual contribution of such product and services sold by entity need to be disclosed.
Market served by entity
  • Disclosure of number of locations along with a brief description on types of consumers served by the entity
Employees
  • Disclosure on total number of employees and workers
  • Disclosure on number of women comprising Board of Directors and Key Management Personnel
  • Disclose trends for the past 3 years in terms of turnover rate for permanent employees and workers.
CSR
  • Financial details of the company
Transparency and disclosure compliance
  • Disclosure on grievances on any aspect of the National Guidelines on Responsible Business Conduct during current and previous financial year
Material responsible business conduct issues
  • Specific disclosure on ‘material responsible business conduct’ and sustainability issues pertaining to ESG matter.

Section B: Management and process Disclosure

It includes preparation/identification of policy(ies), processes put in place towards adopting the NGRBC principle and core elements, Sustainability Governance Structure to benchmark, implement and monitor sustainability aligned decisions and actions.

Some of the key disclosures are as follows:

  • Policy and management process
  • Governance, leadership and oversight

Section C: Principle wise performance disclosure

P1 Businesses should conduct and govern themselves with integrity, and in a manner that is Ethical, Transparent and Accountable.

  • Detailed description of number of trainings and awareness programmes on any of the principles held for the Board, KMP, employees and workers
  • Details of fine/penalties /punishments/awards/compounding fees/settlement paid
  • Disclosure on number of complaints received
  • Details relating to anti- corruption

P2 Businesses should provide goods and services in a manner that is sustainable and safe.

  • Disclose percentage of Research and development and capital expenditure investments
  • Disclose procedure on Sustainable sourcing
  • Details of Life Cycle Assessment
  • Disclosure on Extended producer Responsibility

P3 Businesses should respect and promote the well-being of all employees, including those in their value chains.

  • Detailed measure taken by entity for their employee’s
  • Details of retirement benefits

P4 Businesses should respect the interests of and be responsive to all its stakeholders.

  • Disclosure about the processes for identifying key stakeholder group

P5 Businesses should respect and promote human rights.

  • Details of training
  • Details of minimum wages paid

P6 Businesses should respect and make efforts to protect and restore the environment.

  • Specific disclosures relating to water withdrawal
  • Disclosure regarding whether the entity has implemented a mechanism for zero liquid discharge
  • Details of air emission or greenhouse gases
  • Disclose the details of environmental impact assessment project.

P7 Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent.

  • Disclose details on trade and industry chambers of the entity
  • Disclose details of corrective actions taken or underway on any issues related to anti -competitive conduct by the entity

P8 Businesses should promote inclusive growth and equitable development.

  • Disclose details of Social Impact Assessment (SIA) of projects undertaken by the entity
  • Disclose details of preferential procurement policy

P9 Businesses should engage with and provide value to their consumers in a responsible manner.

  • Number of consumer complaints received during the current year and previous year
  • Advertising, cyber security and unfair trade practises along with the details regarding mechanism
  • Disclosure regarding framework /policy on cyber security and risks related to data privacy along with providing weblink of the policy.

Conclusion:

BRSR is the need of the hour as companies are no longer being judged only on the basis of financial metrics but also on how they are creating an impact across the society. The move towards BRSR is in line with the emerging trends globally on reporting on ESG matters.

The national law of EU countries are also undergoing legislative changes in line with the EU Non-Financial Reporting Directive.

Unlike financial reporting where companies have robust system in place to capture and report necessary data, reporting around ESG parameters is still at a growing stage. Therefore, there is an urgent need to invest in necessary mechanism which could help in three aspects:

1. Enable capturing the required data for reporting ESG matters

2. Selection of sustainable framework and related metrics that can be adopted by companies to facilitate reporting

3. Level of assurance to be provided on such reporting.

BRSR reporting is a first step towards achieving these milestones.

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