SHIFT FROM BUSINESS RESPONSIBILITY REPORTING (“BRR”) TO BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING (“BRSR”) – Eshwars
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SHIFT FROM BUSINESS RESPONSIBILITY REPORTING (“BRR”) TO BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING (“BRSR”)

Authored by Adit Bhuva

The Securities and Exchange Board of India (“SEBI”) has at its board meeting held on 25th March 2021, decided to introduce new requirements for sustainability reporting by listed companies, to be called the Business Responsibility and Sustainability Report (“BRSR”), replacing the existing Business Responsibility Report (“BRR”).

The BRSR shall be applicable to top 1000 listed entities (by market capitalisation), for reporting on a voluntary basis for FY 2021-22 and on a mandatory basis from FY 2022-23.

Brief background on the introduction of BRSR:

1. SEBI had introduced non-financial reporting in the form of BRR as part of annual reports for the top 100 listed companies in the year 2012.

2. Applicability of BRR extended to top 500 listed companies in the year 2016

3. Applicability of BRR extended to top 1000 listed companies from the financial year 2019-20.

4. The existing format of BRR is based on ‘National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business’ (“NVGs”) issued by the Ministry of Corporate Affairs (“MCA”), Government of India.

5. In keeping with global developments and domestic changes, these NVGs were revised and released as the National Guidelines on Responsible Business Conduct (“NGRBCs”) in March 2019.

6. A committee was formed by MCA to align the existing BRR formats in line with the NGRBCs and provide new formats (“Committee”).

7. The Committee had prescribed a revised format in its report dated 8th May 2020 and to reflect the intent and scope of reporting requirement, the Committee recommended that the BRR be called the Business Responsibility and Sustainability Report (“BRSR”).

8. SEBI on 18th August 2020 issues a consultation paper, inviting public comments on the format of BRSR by 18th September 2020.

9. On 25th March 2021, SEBI decides to make the BRSR applicable to top 1000 listed entities (by market capitalisation), for reporting on a voluntary basis for FY 2021-22 and on a mandatory basis from FY 2022-23.

Status on the notification of the Format of BRSR by SEBI:

It is to be noted that SEBI is yet to notify the format of BRSR. However an overview on the format of BRSR as suggested by the Committee is provided below:

(a) Principles under which the BRSR to be done:

The non-financial disclosures which are from an Environmental, Social and Governance (“ESG”) perspective, are sought under 9 principles for measuring the performance of the businesses in the area of business responsibility and sustainability:

(i) Businesses should conduct and govern themselves with integrity in a manner that is ethical, transparent and accountable

(ii) Business should provide goods and services in a manner that is sustainable and safe

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

(iv) Business should respect the interest of and be responsive to all its stakeholders

(v) Businesses should respect and promote human rights

(vi) Business should respect and make efforts to protect and restore the environment

(vii) Business, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent.

(viii) Businesses should promote inclusive growth and equitable development

(ix) Businesses should engage with and provide value to their consumers in a responsible manner

(b) The BRSR lays considerable emphasis on quantifiable metrics, which allows for easy measurement and comparability across companies, sectors and time periods.

(c) Further, the disclosures on environmental and social (employees, consumers and communities) related issues of a listed entity have been significantly enhanced and made more granular.

(d) The disclosures under the aforesaid principles are categorised under

(i) Essential (mandatory) indicators; and

(ii) Leadership (voluntary) indicators.

(e) The BRSR format contains a section on management and process disclosures, which will help businesses demonstrate the structures, policies and process put in place towards adopting the aforestated principles, wherein the businesses are required to disclose the policies adopted by them to cover each of the above stated principles and review of the implementation of such policies.

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