In recent years, the importance of sustainability and responsible business practices has gained significant traction globally.
In India, the Business Responsibility and Sustainability Reporting (BRSR) framework was introduced to enhance transparency and accountability among companies regarding their environmental, social, and governance (ESG) practices.
I must confess I am a new learner in the nitty-gritty aspects of this area. While the concept of sustainability is deeply ingrained, I have started picking up the finer nuances only after completing my ESG Director Certification program which was conducted by one of India’s finest Gurus.
Sustainability reporting in India has evolved significantly with the introduction of the Business Responsibility and Sustainability Reporting (BRSR) framework by SEBI in 2021. As businesses align with ESG Goals, BRSR integrates global standards like the UN SDGs and GRI, making sustainability disclosures more structured and transparent.
BRSR is a comprehensive reporting framework mandated by the Securities and Exchange Board of India (SEBI) for the top 1,000 listed companies by market capitalization. It requires these companies to disclose their ESG performance as part of their annual reports. The BRSR framework aims to ensure that businesses operate responsibly and contribute to sustainable development.
The BRSR framework replaces the earlier Business Responsibility Report (BRR) and introduces a more structured approach to sustainability reporting. Companies must answer 140 questions divided into 98 essential indicators (mandatory) and 42 leadership indicators (voluntary).
BRSR disclosures are divided into three major sections:
1. General Disclosures
This section captures fundamental corporate information, including:
- Company name, CIN, and location details
- Revenue, turnover, and employee demographics
- Board diversity, including gender ratios and senior management composition
- Employee turnover rates
2. Management & Process Disclosure
Companies must outline their approach to ESG policies based on NGRBC’s Nine Principles, covering areas such as:
3. Principle-Wise Performance Disclosure
Divided into Essential Indicators (Mandatory) & Leadership Indicators (Voluntary):
The BRSR framework consists of nine principles that guide companies on what to report:
1. Ethical Business Conduct: Companies must demonstrate integrity in their operations.
2. Product Management: Ensuring products are safe and environmentally friendly.
3. Employee Welfare: Focusing on employee rights and benefits.
4. Effective Communication with Shareholders: Maintaining transparency with investors.
5. Human Rights: Upholding human rights within business practices.
6. Environmental Care: Taking steps to minimize environmental impact.
7. Public Policy Advocacy: Engaging responsibly in public policy discussions.
8. Economic Development: Contributing positively to economic growth.
9. Customer Value: Ensuring customer satisfaction and safety.
BRSR reporting represents a significant shift towards greater corporate responsibility in India. By embracing this framework, companies can not only comply with regulatory requirements but also enhance their reputation, attract investment, and contribute positively to society and the environment. As more companies adopt these practices, India moves closer to achieving its sustainability goals while fostering a culture of transparency and accountability in business operations.
While market capitalization is an important financial metric, it might not fully capture the social and environmental impact of a company, which are key components of BRSR.
From FY 2025-26, top 250 listed companies will be required to disclose their ESG performance in a standardized format under BRSR Core.
SEBI encourages unlisted companies to adopt BRSR Lite to enhance investor appeal and ESG credibility.
Technology plays a crucial role in reporting by enabling companies to collect, analyse, and disclose large amounts of data related to their ESG performance. Advanced software solutions allow companies to track their environmental impact in real time, monitor social initiatives, and ensure compliance with governance standards. Technology also facilitates the creation of more detailed and accurate reports, which can be shared with stakeholders through digital platforms. It may be a good idea if top 1000 companies in terms of market cap plus top 1000 companies in terms of turnover are considered for the applicability of BRSR . This would increase the pool and put India right in the top tier in terms of pushing the sustainability agenda.
As sustainability and corporate responsibility take centre stage, ESG reporting has become an indispensable aspect of modern business. By providing transparency, building investor confidence, ensuring regulatory compliance, and driving long-term value, ESG reporting plays a pivotal role in shaping the future of businesses. Companies that embrace ESG reporting are contributing to a more sustainable world and positioning themselves for continued success in a rapidly evolving global market. With the growing importance of ESG factors in the eyes of investors, regulators, consumers, and employees, companies prioritising ESG reporting will likely enjoy a competitive advantage and long-term success.
With the current geo-political environment and situation prevailing post certain key elections globally, it is likely that this area may get some amount of setback. As it appears, this setback could at best be temporary.
