Securities and Exchange Broad of India

CONSULTATION PAPER ON THE FORMAT FOR BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING

Dated: August 18, 2020 – Reports : Reports for Public Comments

A. Background

1. SEBI, in 2012, mandated the top 100 listed entities by market capitalisation to file Business Responsibility Reports (BRR) as per the disclosure requirement emanating from the ‘National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business’ (NVGs). These guidelines contained comprehensive principles to be adopted by companies as part of their business practices and a structured business responsibility reporting format requiring certain specified disclosures, demonstrating the steps taken by companies to implement the said principles. The requirement for filing BRRs was extended to the top 500 entities companies by market capitalisation from the financial year 2015-16. In December 2019, SEBI extended the BRR requirement to the top 1000 listed entities by market capitalisation, from the financial year 2019-20.

2. The philosophy of responsible business is based on the principle of business being accountable to all its stakeholders towards global developments which are increasingly seeking businesses to be responsible and sustainable towards their environment and society. In light of ever-increasing global challenges relating to climate change, environmental risks, growing inequality, etc., business leaders have been compelled, and have also found it to be in their interest, to reimagine the role of businesses in the society and not view them merely as economic units for generating wealth. The performance of a company must be measured not only on the return to shareholders, but also on how it achieves its environmental, social, and good governance objectives. Therefore, globally there is a growing recognition and emphasis on stakeholder model of governance amongst all stakeholders including institutional investors.

3. In order to align the NVGs with the emerging global concerns, the Sustainable Development Goals (SDGs), and the United Nations Guiding Principles on Business & Human Rights (UNGPs), the NVGs were revised and released as the National Guidelines on Responsible Business Conduct (NGRBCs) in March 2019.

4. In November 2018, the Ministry of Corporate Affairs (MCA) constituted a Committee on Business Responsibility Reporting (‘Committee’) for finalising Business Responsibility Reporting formats for listed and unlisted companies, based on the framework of the NGRBCs. SEBI was also part of this Committee and worked on the report. The report of the Committee was released on August 11, 2020. 1

B. Business Responsibility and Sustainability Report (BRSR)

1. The Committee recommends that the Business Responsibility Report be called the Business Responsibility and Sustainability Report (BRSR). These disclosures, which are from an Environmental, Social and Governance (“ESG”) perspective that have been recommended in the BRSR, are intended to enable businesses to engage more meaningfully with their stakeholders, and encourage them to go beyond regulatory financial compliance and report on their social and environmental impacts.

2. The comprehensive format for reporting as recommended by the Committee for listed entities is enclosed at Annex – 1. Further, in order to enable better reporting by companies, the Committee has also developed a guidance note to define and interpret the scope of each question in the BRSR (enclosed at Annex – 2).

C. Proposal

It is proposed that the format for business responsibility and sustainability reporting, as recommended by the Committee, shall be applicable to the top 1000 listed entities by market capitalization. It is also proposed that to begin with, the new format will be adopted by such listed entities on a voluntary basis for the financial year 2020 – 21 (for those who choose not to adopt the new format, the existing format will apply) and mandatorily from the financial year 2021-22.

D. Public Comments:

In order to take into consideration, the views of various stakeholders, public comments are invited on the aforesaid business responsibility and sustainability reporting format. Comments may be sent by email, in the following format:

Name of the person/entity proposing comments:
Sr. No. Recommendation in the business responsibility and sustainability reporting format to which the comment pertains Comment Rationale for the comment Revisions to the recommendations, if any

The comments may be sent by email to Pradeep Ramakrishnan, General Manager, at pradeepr@sebi.gov.in and Ishita Sharma, Manager, at ishitas@sebi.gov.in, no later than September 18, 2020.

Issued on: August 18, 2020

Download Full Text of Report with Annexures

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