BRSR Core Regulatory Framework & New COSO ESG Guidance

In July 2023, SEBI introduced new ESG metrics, making them mandatory for certain listed Indian companies under the ‘BRSR Core.’ This regulation expands on the initial Business Responsibility and Sustainability Report (BRSR) format launched in May 2021, replacing the previous report (BRR). As of FY 2023, the top 1000 listed companies by market cap in India must submit their BRSR Report.

Now, the question arises whether BRSR stands alone or becomes an integral part of broader corporate reporting, subject to scrutiny by the stakeholders. This accountability shift is a significant consideration for corporate entities.

To trace answer to this question and seek expert views, Protiviti and the Institute of Internal Auditors recently conducted the second series of ESG webinars on ‘BRSR Core Regulatory Framework & New COSO ESG Guidance’ featuring industry leaders Santhosh Jayaram, Global Head – Sustainability, HCL Technologies, Rajendran Aruanchalam, Group CFO, Thermax, Seema Grover, Global Head - Treasury, Risk Group Controller & Insurance, Dr. Reddy’s Laboratories along with Jayanthi Raju Vadivelu, Director, Protiviti Member Firm (India).

The discussion revolved around SEBI's Circular on ESG Disclosures and the new COSO guidance on Internal Control over Sustainability Reporting (ICSR). Led by moderator Anjani Agrawal, Independent Director, Board Advisor, Protiviti Member Firm (India), the conversation delved into improving internal control, ESG operations, and value chain disclosures under the BRSR Core Regulatory Framework & New COSO ESG Guidance.

Webinar key points of discussion:

• SEBI’s ESG-Related Reforms
• New Disclosure guidelines as per BRSR Core and their applicability
• Adapting the BRSR Core for listed companies, assurance methods, and value chain disclosures
• Criteria for choosing a BRSR Core Assurance provider, including expertise and conflict restrictions
• Understanding ICSR and its importance for your organization
• Using COSO ICIF to create, assess, and achieve effective Internal Controls for Sustainability Reporting (ICSR)
• Main themes and lessons from COSO supplemental guidance and case studies
• Getting ready for upcoming regulatory changes and meeting sustainability reporting expectations

Besides, the webinar readily highlighted seven practical uses that businesses can leverage from the COSO ICSR guidance:

• Training & Development: Educate management and ESG data/control owners
• Benefits: Leverage the highlighted benefits of having an ESG program
• COSO Mapping: Perform a COSO mapping of ESG activities to the 17 principles
• Control Documentation: Create RCMs for your ESG program (Enhances the 10 principles)
• Illustrative Examples: Leverage the illustrative examples to enhance your organization’s ESG program
• ITGC: IT General Controls should be extended to ESG applications
• Control Testing: Evaluate the effectiveness of ICSR and assist in the preparation and execution of third-party assurance

Conclusion:

The BRSR Core framework in India diversifies disclosure requirements, fostering sustainability across the value chain. Despite data availability and maturity challenges, flexible ESG data management and technology can simplify reporting, build trust, and enhance transparency in ESG performance.

The newly issued BRSR Core defines reporting and assurance standards for which aligning with COSO ICSR guidance seems appropriate. To sustain ESG reporting quality, organizations can adopt the three C’s approach: collection, consistency, and confidence. Leveraging digital data management platforms enables data analytics and visualization and ensures accurate and comprehensive ESG reporting.

To explore further insights from the webinar and access the recording, please click the link below: https://www.youtube.com/watch?v=WDiJO7v27Co