Addressing the need to extend and enhance the ESG disclosures in India, the Securities and Exchange Board of India (SEBI) launched the new Business Responsibility and Sustainability Reporting (BRSR) framework in May 2021 to replace the existing Business Responsibility Reporting (BRR) framework.

The disclosures were voluntary for FY 2021 – 22 and is mandatory from FY 2022 – 23, for the top 1,000 listed companies by market cap.

BRSR is a standard and consistent framework which has been prepared keeping in mind the dynamic global trends in sustainability reporting. It is evident that the Indian reporting scenario is evolving rapidly in line with international norms and regulations where corporates are expected to run businesses conscientiously and maintain transparency and accountability in reporting. BRSR is expected to be used as a single source for disclosing sustainability-related information in India. It would also serve as a base document for various stakeholders, especially investors, to bring about comparability amongst companies.

Indian reporting landscape’s journey to BRSR

The MCA issued National Voluntary Guidelines (NVGs) on corporate social responsibility

SEBI made it compulsory for the top 100 listed companies by market capitalisation to file BRR based on NVGs, along with their annual reports

Corporate Social Responsibility (CSR) becomes mandatory and CSR rules come into force

Filing BRR was extended to the top 500 companies by market capitalisation

Filing BRR was extended to the top 500 companies by market capitalisation

National Guidelines of Responsible Business Conduct (NGRBC) is released

SEBI introduced BRSR in May

Source: MCA, SEBI, Companies Act, 2013

International movements on ESG Reporting

Governments of several countries have introduced disclosures on sustainability reporting. Countries like Denmark, South Africa, China, Malaysia, and Philippines require certain companies to make disclosures in relation to their non-financial performance across ESG aspects.
EU Non-Financial Reporting Directive is one of the most significant EU-wide legislative initiatives to promote sustainability reporting. Climate change related reporting is prevalent in Australia, Mexico, USA, and in France. The Modern Slavery Act, first enacted by the UK in 2015 and more recently by Australia, asks each company to report on modern slavery not just in its operations but also in its global supply chains, thereby including many SMEs in emerging markets.
International investors with global investment portfolios are increasingly calling for high quality, transparent, reliable, and comparable reporting by companies on climate and other environmental, social and governance (ESG) matters.
On 3 November 2021, the IFRS Foundation Trustees announced the creation of a new standard-setting board—the International Sustainability Standards Board (ISSB).
The ISSB will benefit from the consolidation of global bodies (Climate Disclosure Standards Board – CDSB, International Integrated Reporting Council – IIRC and Sustainability Accounting Standards Board – SASB) – as well as the support of International Organization of Securities Commission – IOSCO, Task Force on Climate-related Financial Disclosures – TCFD and World Economic Forum – WEF). Together they share the aim of enterprise value-focused sustainability disclosures.
The World Economic Forum has also released a set of universal ESG metrics and disclosures that companies can report on. These metrics and disclosures are aligned with the UN SDGs: Principles of governance, planet, people, and prosperity.

Compatibility of BRSR with other reporting frameworks

Companies preparing and disclosing sustainability reports based on internationally accepted reporting frameworks such as GRI, SASB, TCFD, are allowed to cross refer the disclosures made under such framework to the disclosures sought under BRSR.
Companies may leverage existing disclosures to avoid repetitions.
Mandatory reporting under BRSR shall not restrict companies from making extensive disclosures in their annual reports voluntarily through integrated reporting or other sustainability report frameworks.
The growing salience of non- financial disclosures along with annual financial disclosures ensures that the business explicitly recognize their environmental and social responsibilities. As the sustainability disclosures grow in eminence, it is hoped that the information would be used by banks, credit rating agencies, and other financial institutions, along with financial information to assess credibility of a company/business.
It is to seen whether the BRSR gain acceptability and credence among global frameworks as a singular source of information for companies reporting in India, such that they serve as a primary document for assessment of businesses as it has been hoped by the regulators.

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