Understanding BRSR Reporting Requirements from SEBI

In recent years, the focus on sustainability and responsible business practices has intensified, leading to the introduction of the Business Responsibility and Sustainability Reporting (BRSR) framework by the Securities and Exchange Board of India (SEBI). This framework mandates that the top 1,000 listed companies in India report their environmental, social, and governance (ESG) performance as part of their annual reports.

What is BRSR?

BRSR is designed to promote transparency and accountability in corporate governance by requiring companies to disclose their performance against nine principles outlined in the National Guidelines on Responsible Business Conduct. These principles encompass ethical business practices, employee welfare, environmental stewardship, and community engagement, among others.

Starting from the financial year 2022-23, companies are not only required to report their ESG metrics but also to obtain reasonable assurance on their BRSR disclosures from independent agencies. This requirement is set to expand to include value chain disclosures on a comply-or-explain basis from FY 2024-25, further emphasizing the importance of responsible business practices throughout the supply chain.

The Importance of BRSR Compliance

As organizations navigate the complexities of BRSR reporting, the implications of non-compliance can be significant. Companies that fail to meet these requirements risk losing investor trust, facing regulatory penalties, and damaging their reputation in an increasingly sustainability-conscious market. Therefore, it is crucial for organizations to understand the BRSR framework and implement effective reporting strategies.

Key BRSR Requirements

1. Mandatory Reporting:

- From the financial year 2022-23 onwards, the top 1,000 listed companies by market capitalization are required to file BRSR reports as part of their annual reports. This requirement is aimed at promoting sustainable business practices and responsible management.

2. Nine Principles of Responsible Business:

- BRSR is based on the nine principles outlined in the National Guidelines on Responsible Business Conduct (NGBRCs). These principles cover various aspects of corporate responsibility, including ethical business conduct, employee welfare, environmental sustainability, and community engagement.

3. Key Performance Indicators (KPIs):

- As of July 12, 2023, SEBI has mandated that companies include specific Key Performance Indicators (KPIs) related to the nine ESG attributes in their BRSR reports. This requirement aims to standardize the reporting of ESG performance and enhance comparability among companies.

4. Value Chain Reporting:

- Starting from the financial year 2024-25, companies will need to report on their value chain disclosures on a comply-or-explain basis. This means that organizations must disclose information related to their suppliers and partners, focusing on those that account for a significant portion of their purchases or sales.

5. Assurance Requirements:

- Companies are required to obtain reasonable assurance on their BRSR disclosures from an independent agency. This requirement will start with the top 150 listed entities in FY 2023-24 and will expand to include all top 1,000 listed entities in subsequent years. Assurance is essential to validate the accuracy and reliability of the reported information.

6. Compliance with Global Standards:

- BRSR aligns with global ESG reporting standards to ensure that Indian companies adhere to best practices in sustainability reporting. Companies are encouraged to follow recognized assurance standards, such as the International Standard on Assurance Engagements (ISAE) 3000.

7. Stakeholder Engagement:

- Companies must engage with stakeholders to understand their expectations and concerns related to ESG issues. This engagement is crucial for identifying material issues and ensuring that the BRSR report reflects the interests of various stakeholders.

8. Public Consultation and Feedback:

- SEBI has actively sought public comments and feedback on the BRSR framework to facilitate ease of compliance and improve the reporting process. This collaborative approach aims to refine the requirements based on stakeholder input.

How Quality Austria Central Asia Can Assist

At Quality Austria Central Asia (QACA), we recognize the challenges organizations face in fulfilling BRSR requirements. Our expertise lies in helping companies navigate the intricacies of ESG reporting and compliance. Here’s how we can support your organization:

- Training Programs: We offer tailored training sessions on BRSR reporting requirements, helping your team understand the framework, its principles, and the necessary metrics for effective reporting.

- Advisory Services: Our experienced consultants can provide guidance on implementing best practices for BRSR compliance, ensuring that your organization meets all regulatory requirements.

- Audit and Assurance: We can assist in conducting internal audits and assurance reporting of your BRSR disclosures, providing valuable insights and recommendations for improvement.

- Value Chain Assessment: Understanding the importance of value chain reporting, we help organizations assess their supply chain partners to ensure compliance with BRSR requirements.

Conclusion

As the BRSR framework continues to evolve, organizations must stay ahead of the curve to ensure compliance and demonstrate their commitment to sustainability. Quality Austria Central Asia is here to support you in navigating these requirements effectively. By partnering with us, you can enhance your reporting capabilities, improve stakeholder trust, and contribute to a more sustainable future.

For more information on how we can assist your organization with BRSR reporting and training, please contact us today!