Business Responsibility and Sustainability Reporting (BRSR) is by far the most comprehensive document introduced by the Security and Exchange Board of India. This will replace the previously used Business Responsibility Reporting (BRR).
Who will be publishing a BRSR Report?
BRSR is applicable to the top 1000 listed entities (by market capitalization), for reporting on a voluntary basis for FY 2021 – 22 and on a mandatory basis from FY 2022 – 23.
What is the big Change?
To put it simply, the level of disclosures that is expected from the listed entities is much more elaborate and on multiple aspects. From ESG perspective, this gives considerable force to the non-financial reporting.
Why is ESG Reporting required?
Quantifiable and standardized ESG metrics are to be focussed, which allows for easy measurement and comparability across companies, sectors and time periods. Such disclosures will be helpful for investors to make better investment decisions. Further, the disclosures on climate and social (employees, consumers and communities) related issues of the entity have been significantly enhanced and made more granular. BRSR of the company will disclose important ESG-related information, enabling the market participants to identify and assess sustainability-related risks and opportunities.
What about other Reporting Formats?
BRSR provides for interoperability of reporting which means that the entities which prepare sustainability reports based on internationally accepted reporting frameworks (such as the GRI, SASB, TCFD, Integrated Reporting) can cross-refer the disclosures sought under the BRSR to the disclosures made under such frameworks.
An opportunity for leaders to shine?
BRSR seeks disclosures from listed entities on their performance against the nine principles of the ‘National Guidelines on Responsible Business Conduct’ (NGBRCs) and reporting under each principle is divided into:
- Essential (mandatory)
- Leadership (voluntary)
The essential indicators are required to be reported on a mandatory basis while the reporting of leadership indicators is on a voluntary basis. Listed entities should endeavor to report the leadership indicators also.
Non-Financial Reporting (BRSR) is an opportunity for companies to build trust with stakeholders.
Industry leaders have been able to showcase the data on governance, environmental and social indicators whether using GRI, IR, SASB or bespoke frameworks. In addition to that Companies also report on certain other indicators such as climate policy, and climate risks in line with certain well-defined scenarios.
BRSR reports can be cross referenced and for companies who have already been reporting on other frameworks particularly GRI, there is not much difference or effort that is required to publish a GRI Report. However, for companies who have not been reporting previously or have not made non financial disclosures, it may be important to have an internal exercise carried out for the current year that will help companies analyse carefully whether the company practices are disclosure worthy.
How non-financial reporting started?
Financial reporting has been the focus of the global industry and is driven by regulatory bodies, shareholders including institutional investors. However, in the previous two decades, a lot of traction has been happening on non-financial reporting. What started as a voluntary reporting practice, to showcase leadership or build trust with stakeholders, has slowly seeped in as essential reporting for all companies.
In addition to that there are other disclosures specifically on climate change which is driven by CDP and now also pushed by TCFD. TCFD talks about climate risk disclosures for specific risks such as transition and physical risks.
The bedrock on which voluntary reporting sits is trust and transparency. It is time that companies make use of this opportunity and share the information that all stakeholders can make use of to assess the company’s non-financial reporting.
