The Securities and Exchange Board of India (SEBI) introduced new requirements for sustainability reporting by listed entities. The new reporting called the Business Responsibility and Sustainability Report (BRSR) will replace the existing Business Responsibility Report (BRR).
The SEBI press release said the BRSR will be applicable to the top 1000 listed entities (by market capitalization), for reporting on a voluntary basis for FY 2021 – 22 and on a mandatory basis from FY 2022 – 23.
The BRSR lays considerable emphasis on quantifiable metrics, which allows for easy measurement and comparability across companies, sectors and time periods. Further, the disclosures on climate and social (employees, consumers and communities) related issues of the entity have been significantly enhanced and made more granular.
The disclosures under the BRSR are segregated into essential (mandatory) and leadership (voluntary) indicators. The BRSR also provides for inter-operability of reporting i.e. the entities which prepare sustainability reports based on internationally accepted reporting frameworks (such as the GRI, SASB, TCFD, Integrated Reporting) can cross-reference the disclosures sought under the BRSR to the disclosures made under such frameworks.
The new reporting requirements are expected to bring in greater transparency through the disclosure of material ESG-related information to enable market participants to identify and assess sustainability-related risks and opportunities.
These requirements set the stage for taking a leap for better disclosures in the ESG space in India, the release said.
Taking into account the national and international developments in the arena of business and human rights since 2011, the NVGs have been updated and released as NGRBC (National Guidelines on Responsible Business Conduct) in March 2019 to reveal alignments with the UNGPs, UN Sustainable Development Goals (SDGs), Paris Agreement on Climate change etc.
In furtherance to updation and formulation of the NGRBCs, the Ministry of Corporate Affairs had constituted a ‘Committee on Business Responsibility Reporting’ to develop new BRR formats for listed and unlisted companies. The Committee comprised of representatives from MCA, SEBI, three professional institutes, and two eminent professionals who had worked on developing the NGRBCs.
After extensive consultations with various stakeholders including businesses and their associations, professional institutes, academia, civil society organizations, central Ministries and Departments, the Committee submitted its Report to the Central Government. In its Report, the Committee recommended a new reporting framework called as the ‘Business Responsibility and Sustainability Report (BRSR)’ to better reflect the intent and scope of reporting on non-financial parameters. The Committee recommended two formats for disclosures: one ‘comprehensive format’ and the second a ‘Lite version’. The Committee further recommended that the implementation of the reporting requirements should be done in a gradual and phased manner. The Committee also recommended that the BRSR be integrated with the MCA21 portal. As a long-term measure, the Committee envisions that the information captured through BRSR filings be used to develop a Business Responsibility-Sustainability Index for companies.