Introduction
Business Responsibility and Sustainability Report (BRSR) was introduced by Ministry of Corporate Affairs (MCA) Bharat and mandated through SEBI for better management of ESG related activities by company and as a way to achieve national goals through corporates.
As BRSR was mandatory for top 1000 listed companies in India for FY23 reporting, the report was understood and prepared by the most of the companies. As ESG and Bharat continues to evolve, so does the ESG framework of BRSR. For FY24 reporting, the government has notified some more changes in the framework which will be discussed in this document along with how the personnel in the company can manage this new set of changes.
Along with the introduction of BRSR, there were also new regulations and notifications on ESG disclosures for the value chain, how BRSR data must be used by the ESG Rating Providers (ERPs), and how this rating and BRSR data must be used by the mutual funds consisting of ‘ESG funds’. While these are important topics and will have impact on how the company is perceived by the shareholders and other stakeholders, these are not discussed in this document given how our focus is to help companies collect and manage the new set of information within BRSR.
BRSR Core
BRSR is derived from a set of guidelines known as National Guidelines for Responsible Business Conduct (NGRBC,2019) and hence contains 9 principles under which data is reported. The BRSR reporting is still applicable for top 1000 listed Indian companies and its overall structure and guidelines remains the same. However, a new concept called BRSR-Core has been introduced for FY24, which contains a list of KPIs as a subset of BRSR report.
BRSR core contains 9 attributes spread across Section C of BRSR. The following are the 9 attributes which form BRSR Core.
1. Greenhouse gas (GHG) footprint
2. Water footprint
3. Energy footprint
4. Waste management
5. Employee Wellbeing and Safety
6. Gender Diversity
7. Inclusive Development
8. Fairness in Engaging with Customers and Suppliers
9. Open-ness of business
Some of these KPIs were already part of BRSR disclosure in the last year and some of these KPIs are new for this year. Within these KPIs, there is also an introduction of Intensity ratios based on revenue adjusted for Purchasing Power Parity (PPP) to enable global comparability of the emissions reported across the globe.
The KPIs forming part of BRSR Core are given special attention by MCA and can be expected to be given a higher priority by the ERPs for assigning ESG rating to the companies. To ensure that the data is accurate and reflects the true nature of business, SEBI has also mandated reasonable assurance on BRSR Core for top 150 listed companies. Reasonable assurance is more rigorous than limited assurance and requires more evidence for the statements made. In Reasonable assurance, the auditor affirms that the information reported is materially correct. In contrast, limited assurance states that the auditor is not aware of any material modifications that should be made.
Within couple of weeks into April, NSE will release the new list for the listed companies sorted as per the market capitalization. Companies can consider getting a reasonable or limited assurance for the data depending on the mandate and the level of preparedness it requires.
Changes in BRSR framework
There are 3 sections in BRSR, the largest one being Section ‘C’. Section C contains set of data divided into 9 principles. Each of the principles are further divided into ‘essential indicators’, which are mandatory to disclose, and ‘leadership indicators’, which are voluntary to disclose. For FY24, the ‘Essential indicators’ have undergone updates to incorporate new KPIs from the BRSR Core framework while certain KPIs have been transposed from Leadership to Essential Indicators.
The complete set of revisions in new BRSR format is given below.
Data Collection guidance for the new set of Data
Section A : Details about the assurance provider and the type of assurance.
Data collection: This is straightforward and will be available with the department overseeing BRSR compliance. For the level of assurance, the verification certificate given by the assurance provider can be referred.
Principle 1: Details regarding Accounts payable and Openness of business.
Data collection: This data can be arrived at between Procurement department and accounting/finance department.
Principle 3: Details related to spending on employee & worker well-being
Data collection: The responsibility of this data will be with Human Resources (HR) department in most of the organizations. Some data will also require inputs from accounting/finance team.
Principle 5: Gender equality and POSH (Prevention of Sexual Harassment) complaints
Data collection: HR department maintains records of employee wages, gender diversity metrics and data on Sexual Harassment complaints. In the organizations which has a separate Ethics team which looks at POSH cases, they can be involved accordingly.
Principle 6: GHG emissions intensity and water intensity adjusted for PPP and per output.
Data collection: Most of the large listed organizations will have a dedicated Environment team or an EHS team which looks after this type of data. The overall output figures and PPP amount needs to be obtained from corporate team for the final intensity calculations. The verification of the data can be done through utility bills and emissions reports.
Principle 8: Sourcing of input material and Job Creation in small towns.
Data Collection: Procurement team is primarily responsible material sourcing data. For the KPI related to Job creation, HR department will be responsible in most of the organizations. Verification can be by reviewing procurement records and employment reports.
As the FY24 BRSR format introduces significant updates to enhance the transparency and accountability of corporate ESG practices, companies are advised to meticulously integrate these changes into their reporting mechanisms. Embracing the revised framework not only aligns businesses with national sustainability goals but also strengthens stakeholder trust by providing a clearer picture of ESG commitments and performances. The transition to the updated BRSR format, with a focus on the newly emphasized KPIs and assurance levels, presents an opportunity for companies to lead in responsible business conduct and sustainability, setting a benchmark for others in the corporate ecosystem.
End-note
Reference – Guidelines and regulations from Securities and Exchange Board of India (sebi.gov.in)
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