The Business Responsibility and Sustainability Report (BRSR) is a new format of reporting on environmental, social and governance (ESG) aspects of business introduced by the Securities and Exchange Board of India (SEBI). It aims to provide a comprehensive and standardized disclosure framework for the top 1000 listed companies in India, covering various aspects such as climate change, resource efficiency, human rights, social welfare, governance and ethics. The BRSR is mandatory for these companies from the financial year 2022-23 onwards.
The BRSR is important because it reflects the growing awareness and demand for ESG performance and accountability from various stakeholders, such as investors, customers, regulators, employees and society at large. It also aligns with the global trends and best practices in ESG reporting, such as the Sustainable Development Goals (SDGs), the Task Force on Climate-related Financial Disclosures (TCFD) and the Global Reporting Initiative (GRI) standards. The BRSR will help the companies to communicate their ESG strategy, actions and impacts in a transparent and consistent manner, and also enable the stakeholders to assess and compare their ESG performance.
How is BRSR different from other ESG reporting frameworks?
The BRSR is different from other ESG reporting frameworks in several ways. Some of the key features of the BRSR are:
- It is based on the ‘comply or explain’ principle, which means that the companies have to either comply with the disclosure requirements or explain the reasons for non-compliance.
- It has a quantitative as well as a qualitative approach, which means that the companies have to report both numerical data and narrative information on their ESG performance.
- It has a sector-specific as well as a generic approach, which means that the companies have to report on some indicators that are relevant to their specific sector, as well as some indicators that are applicable to all sectors.
- It has a forward-looking as well as a backward-looking approach, which means that the companies have to report not only on their past performance, but also on their future plans and targets on ESG aspects.
- It has a materiality assessment, which means that the companies have to identify and prioritize the ESG issues that are most significant for their business and stakeholders.
What are the benefits and challenges of implementing BRSR?
The benefits of implementing BRSR are manifold. Some of the potential benefits are:
- It will help the companies to improve their ESG performance and reputation, and gain a competitive edge in the market.
- It will help the companies to attract and retain investors, customers, employees and other stakeholders who value ESG aspects of business.
- It will help the companies to comply with the regulatory requirements and expectations on ESG disclosure.
- It will help the companies to contribute to the national and global goals of sustainable development and climate action.
The challenges of implementing BRSR are also significant. Some of the possible challenges are:
- It will require the companies to invest time, money and resources to collect, analyze and report on a large amount of ESG data and information.
- It will require the companies to adopt a holistic and integrated approach to ESG management, involving various functions and levels of the organization.
- It will require the companies to ensure the quality, reliability and comparability of their ESG data and information.
- It will require the companies to engage with their stakeholders and address their expectations and feedback on their ESG performance.