BRSR Reporting in India
Background
With sustainable development and the climate change movement gaining momentum, the sustainability reporting landscape is changing rapidly around the globe. The push from investors has further accelerated this movement, and it is now incumbent on companies to report their sustainability performance in order to maintain transparency with stakeholders. Sustainability reporting frameworks have evolved over time and companies worldwide have adopted these frameworks for measuring, monitoring and disclosing performance in areas related to environmental, social and governance (ESG).
Global ESG/sustainability disclosures and frameworks such as the Global Reporting Initiative (GRI), Integrated Reporting, Sustainability Accounting Standards Board (SASB), United Nations Global Compact (UNGC) and CDP require businesses to disclose their sustainability performance as per the respective key performance indicators (KPIs) and principles. ISO 26000 offers voluntary guidance on social responsibility. Many countries around
the world have introduced and mandated some form of ESGrelated disclosures.
Evolution of ESG Reporting in India
ESG reporting in India started in 2009 with the Ministry of Corporate Affairs (MCA) issuing the Voluntary Guidelines on Corporate Social Responsibility as the first step towards mainstreaming the concept of business responsibility. Since then, the reporting landscape has come a long way with the introduction of Business Responsibility Reporting (BRR), Corporate Social Responsibility (CSR), IR, National Guidelines on Responsible Business Conduct (NGRBC) and now Business Responsibility and Sustainability Report (BRSR) (introduced through a SEBI circular dated 10 May 2021).
- Evolution:
2009: National Voluntary Guidelines (NVGs) MCA issued NVGs on corporate social responsibility
2012: Business Responsibility Report (BRR) SEBI mandated that the top 100 listed companies by market capitalisation file BRR based on NVGs along with their annual reports
2014: Corporate social responsibility (CSR) CSR is mandated and CSR Rules come into force
2015: Extension to top 500 listed companies Requirement for filing BRR was extended to the top 500 listed companies by market capitalisation
2017: Integrated Reporting (IR) SEBI circular advised that Integrated Reporting may be adopted on a voluntary basis from FY 2017–18 by the top 500 companies which are required to prepare BRR
2019: National Guidelines on Responsible Business Conduct (NGRBC) NGRBC released in March 2019
2019: Extension to the top 1,000 listed companies SEBI extended the BRR requirement to the top 1,000 listed companies by market capitalisation from FY 2019–20
2021: Business Responsibility and Sustainability Report (BRSR) Introduction of BRSR in May 2021
The Business Responsibility and Sustainability Reporting (“BRSR”), originating from the MCA report on Business Responsibility Reporting, has found its way into the regulatory provisions by way of an amendment to the Regulation 34(2)(f) of the Listing Regulations[1], notified on 5th May, 2021. Further, SEBI vide circular dated 10th May, 2021 introduced the format of BRSR and the guidance note to enable the companies to interpret the scope of disclosures.
The BRSR will replace the existing BRR format w.e.f. FY 2022-23. For the FY 2021-22, the top 1000 listed entities may voluntarily submit the BRSR and from FY 2022-23 onwards, the same has to be submitted mandatorily. It is notable that the BRSR, though replacing BRR, is actually an extension of the existing BRR reporting While the BRSR has been made effective from FY 2022-23, it has to be understood that reporting is secondary, and needs to be backed by the company taking appropriate actions to ensure a positive report. Where the BRSR reporting of a company is negative, the same, though not a non-compliance of the regulatory provisions, will result in a negative impact on the minds of the stakeholders.
Basis of reporting requirements under BRSR The base document behind which the BRSR has evolved is the extant BRR and National Guidelines on Responsible Business Conduct (NGRBC) principles, which itself emanates from Social Development Goals (SDGs). The MCA report objectifies BRSR to serve as “a single comprehensive source of non-financial sustainability information relevant to all business stakeholders – investors, shareholders, regulators, and public at large.”
The Business Responsibility and Sustainability Reporting (“BRSR”)
The Business Responsibility and Sustainability Reporting (“BRSR”), originating from the MCA report on Business Responsibility Reporting, has found its way into the regulatory provisions by way of an amendment to the Regulation 34(2)(f) of the Listing Regulations[1], notified on 5th May, 2021. Further, SEBI vide circular dated 10th May, 2021 introduced the format of BRSR and the guidance note to enable the companies to interpret the scope of disclosures.
The BRSR will replace the existing BRR format w.e.f. FY 2022-23. For the FY 2021-22, the top 1000 listed entities may voluntarily submit the BRSR and from FY 2022-23 onwards, the same has to be submitted mandatorily. It is notable that the BRSR, though replacing BRR, is actually an extension of the existing BRR reporting While the BRSR has been made effective from FY 2022-23, it has to be understood that reporting is secondary, and needs to be backed by the company taking appropriate actions to ensure a positive report. Where the BRSR reporting of a company is negative, the same, though not a non-compliance of the regulatory provisions, will result in a negative impact on the minds of the stakeholders.
Basis of reporting requirements under BRSR The base document behind which the BRSR has evolved is the extant BRR and National Guidelines on Responsible Business Conduct (NGRBC) principles, which itself emanates from Social Development Goals (SDGs). The MCA report objectifies BRSR to serve as “a single comprehensive source of non-financial sustainability information relevant to all business stakeholders – investors, shareholders, regulators, and public at large.”