Demystifying and Unlocking the Essence of BRSR in India
Embracing Transparency: An Introduction to Business Responsibility and Sustainability Reporting
By Vishnupriya Chandramouli
The global ESG landscape is undergoing a seismic shift, propelled by heightened investor and stakeholder expectations. From the landmark Paris Agreement to the proliferation of ESG ratings, businesses worldwide are under intense pressure to demonstrate their commitment to sustainability. India is right in the thick of it, with the Business Responsibility and Sustainability Reporting (BRSR) framework serving as the country’s sustainability playbook. Introduced by the Securities and Exchange Board of India (SEBI) in 2021 and mandated for India's top 1000 listed companies from FY 2022-23, BRSR has redefined ESG reporting.
BRSR represents a significant evolution from its predecessor, the voluntary Business Responsibility Report (BRR), by introducing mandatory, standardized, and comprehensive ESG disclosures. Aligned with the Ministry of Corporate Affairs' vision of responsible business conduct, BRSR leverages the nine National Guidelines on Responsible Business Conduct (NGRBC) to drive transparency, accountability, and risk management within India's corporate sector.
Navigating BRSR
The BRSR framework offers a tiered approach to ESG transparency, divided into three sections that progressively unveils a company's sustainability journey. From foundational company details in Section A to strategic overviews in Section B, the framework culminates in Section C, where the company’s sustainability performance aligned to the NGRBC principles is revealed.
Section C of the BRSR framework is indispensable as it is the epicenter of ESG disclosure, providing a detailed breakdown of a company's sustainability performance. Encompassing critical areas such as ethical business conduct, stakeholder interests, environmental stewardship and social impact, this section features both essential and leadership indicators. While essential indicators are mandatory disclosures that establish a baseline, leadership indicators are voluntary metrics that spotlight a company's commitment to exceeding ESG expectations. To supercharge ESG transparency, BRSR Core has been introduced as a specialized subset of the broader framework. This initiative provides granular Key Performance Indicators (KPIs) to illuminate a company's ESG impact. From FY 2023-24, India's top 1000 listed companies have been mandated to adopt BRSR Core, with the leading 150 companies required to undergo mandatory assurance. This marks a pivotal step towards a more accurate and accountable ESG landscape in India.
To benchmark a company's sustainability journey, the Institute of Chartered Accountants of India (ICAI) introduced the Sustainability Reporting Maturity Model (SRMM). This self-assessment tool categorizes companies into four levels: from 'just getting started' (Formative) to 'leading the pack' (Leading by Example). It is like a school report, but for sustainability! The scoring system is based on how well a company follows the BRSR guidelines, with a big focus on both the basics (essential indicators) and going the extra mile (leadership indicators). So, not only can a company see where it fits in, but it can also set goals for improvement.
Embracing BRSR amid implementation challenges
The BRSR framework, while a significant step forward, has presented implementation challenges for Indian corporates. Data collection, consolidation and reporting, particularly for global entities, have been arduous. The absence of detailed guidelines has further exacerbated these difficulties. Nevertheless, the framework's potential to enhance transparency, manage risks, and drive sustainable practices remains compelling.
Recognizing both the challenges and potential of the current BRSR framework, SEBI has unveiled ambitious plans for its improvement. The regulator has proposed some major upgrades to the framework that could substantially elevate the country's sustainability standards. By expanding disclosure requirements to encompass the value chain of the top 250 listed entities and introducing green credits as a new performance metric, SEBI is signaling a strong commitment to driving sustainable business practices and fostering unparalleled transparency.
Putting BRSR and net zero within reach
Navigating the BRSR landscape can feel like trying to solve a complex puzzle. The Global Network for Zero (GNFZ)'s net zero program aligns seamlessly with BRSR's requirements, particularly in addressing environmental impacts. With more than 90% of Principle 6 clauses (emphasizing the protection and restoration of the environment) covered in GNFZ’s certifications, they offer a streamlined approach to data collection, analysis and reporting. GNFZ’s expertise extends beyond compliance, aiding companies in developing comprehensive net zero strategies. Net zero is the logical next step beyond disclosure requirements, and a pivotal stride toward comprehensive ESG performance.
Sustainability is not just about checking boxes; it is about creating a better future for everyone. Ultimately, realizing a zero emissions world hinges on the collective efforts of businesses, regulators and investors. By embracing frameworks like BRSR, organizations can not only meet regulatory requirements but also drive positive change for the planet and society.
Vishnupriya Chandramouli is an associate with the Global Network for Zero. With four years of diverse audit experience across manufacturing, banking, insurance and services sectors, she honed her financial acumen, leading her to pursue the ACCA qualification. Driven by a passion for driving sustainable growth and spreading awareness about ESG, she transitioned from a four-year audit career to focus on the intersection of finance and sustainability. As an ACCA member, she joined GNFZ to contribute to the development of innovative solutions at the forefront of net zero and climate reporting. Her role involves in-depth research, strategic analysis and close collaboration with the technical team to ensure GNFZ’s offerings align with the evolving regulatory landscape. Connect with Vishnupriya on LinkedIn.