Introduction 

In recent times, the global focus has increasingly shifted towards mitigating the impacts of climate change and transitioning to a sustainable economy. Investors and stakeholders are making investment choices promoting responsible and sustainable businesses. This choice of investors and stakeholders is driven by the fact that sustainable practices can lead to long-term financial stability, reduced risk, and positive societal impact. Consequently, reporting on a company's performance in terms of sustainability-related factors has become as vital as reporting on financial and operational performance. This heightened focus has given rise to frameworks like the Business Responsibility and Sustainability Report (BRSR) in India, which aims to enhance transparency and accountability in sustainability reporting.

What is the Business Responsibility and Sustainability Report (BRSR)?

Business Responsibility and Sustainability Report (BRSR) is a framework that allows Indian companies to report on their sustainability performance. This framework is mandatory for the top 1000 listed companies in India, while other companies can voluntarily report their sustainability performance using this framework. BRSR was introduced by the Securities and Exchange Board of India (SEBI) in May 2021. This framework seeks sustainability-related disclosure based on the 9NGBRC (National Guidelines on Responsible Business Conduct) principles.

The requirement for BRSR 

BRSR was not the first framework by SEBI. In 2012, SEBI mandated BRR (Business responsibility reporting) for only the top 100 listed companies by market capitalization. The question that arises here is why a new reporting framework was required. The new BRSR framework covers 140 questions, significantly more than the previous BRR format, which only had 59 questions. These additional questions in the BRSR framework have managed to bridge the gap in terms of accuracy and depth of ESG reporting. The new framework has not only provided a standard format for ESG reporting but also enhanced the standards from existing questions of ESG reporting. Let’s understand the format of BRSR and how companies can report ESG using this framework.

The Format of BRSR 

The BRSR format is divided into 3 sections:

Section A – General disclosures

This section consists of basic details of the business such as its business activities, locations, products, and services. With a total of 8 main headers and 24 main total questions which include information on the company's sustainability policies, processes, and governance structures. The key components include:

I. Details of the listed entity 

II. Products and services 

III. Operation, markets served by the entity.

IV. Employees

V. Holdings, Subsidiaries, and associates 

VII. Transparency and disclosure compliances 

Section B – Management and Process Disclosures 

This section consists of questions about the company's management approach towards sustainability. It includes disclosures on how sustainability risks and opportunities are identified and managed, stakeholder engagement processes, and the integration of ESG factors into business strategies. The components of this section are:

I. Policy and management processes 

II. Governance, leadership, and oversight

III. Details of Review of NGRBCs by the Company:

Section C – Principle-wise Performance Disclosure

This section consists of the disclosure of the company’s performance against the 9 principles. The questions under these 9 principles are divided into essential and leadership indicators. The essential indicators are required to be reported on a mandatory basis while the reporting of leadership indicators is voluntary. Although leadership indicators are voluntary to report, listed entities are strongly encouraged to report on these indicators.

Principle 1 - Businesses should conduct and govern themselves with integrity, and in a manner that is Ethical, Transparent, and Accountable

Principle 2 - Businesses should provide goods and services in a manner that is sustainable and safe.

Principle 3 -Businesses should respect and promote the well-being of all employees, including those in their value chains

Principle 4- Businesses should respect the interests of and be responsive to all its stakeholders

Principle 5 - Businesses should respect and promote human rights 

Principle 6 - Businesses should respect and make efforts to protect and restore the environment

Principle 7 - Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent

Principle 8 - Businesses should promote inclusive growth and equitable development

Principle 9 - Businesses should engage with and provide value to their consumers in a responsible manner.

Benefits of implementing BRSR 

Implementing BRSR can be of value for companies in terms of their business as it has several benefits apart from complying with rules by SEBI to report BRSR.

Enhanced transparency – BRSR encourages companies to disclose their environmental, social, and governance practices which provide stakeholders with information on their company’s sustainability performance, this builds accountability, fosters trust, and improves investor confidence.

Improving Risk Management and Decision-Making – BRSR enables companies to identify and assess the ESG risks, this can be taken into consideration while making decisions for the company, integrating ESG factors into the decision-making process can help the company make informed choices that mitigate risks and enhance resilience. 

Competitive Advantage- Companies committed to sustainability have an edge over their competitors as they automatically become investors’ choice and consumers’ preference which fuels business growth.



Conclusion

The BRSR framework presents a significant opportunity for Indian companies to enhance their sustainability reporting practices. By adopting the BRSR framework you can integrate ESG factors into your business, identify and assess risk, and improve upon them to lead a pathway towards sustainability which in turn helps to fuel the growth of your business.