Pioneering Sustainable Corporate Practices: The Rise of BRSR in India
India's corporate landscape is evolving, marked by an increasing emphasis on sustainable and responsible business practices. This shift has been driven by the need to address environmental, social, and governance (ESG) issues that impact not just businesses but society at large. At the forefront of this transformation is the Business Responsibility and Sustainability Reporting (BRSR) framework—a pioneering initiative designed to promote transparency, accountability, and sustainable development.
Understanding BRSR
The Business Responsibility and Sustainability Report (BRSR) is an evolution of the previous Business Responsibility Report (BRR) framework, offering a more detailed and structured approach to ESG reporting. It aims to provide stakeholders with comprehensive insights into a company's ESG performance, thereby encouraging businesses to integrate sustainability into their core strategies.
Applicability: A Targeted Approach
BRSR Comprehensive
- Applicability: Mandatory for the top 1,000 listed companies based on market capitalization.
- Requirements: Starting from the financial year 2023-24, these companies must provide reasonable assurance on their core ESG (Environmental, Social, and Governance) disclosures.
BRSR Lite
- Target Audience: Smaller companies, including unlisted entities.
- Features:Offers a simplified and condensed reporting format to make sustainability reporting more accessible.
- Assurance: Voluntary, with companies having the option to obtain either limited or reasonable assurance.
BRSR Core
- Purpose:Acts as a focused subset of the BRSR Comprehensive framework, aimed at larger companies transitioning towards full comprehensive reporting.
- Requirements:Includes mandatory disclosures on key ESG aspects. For the top 150 companies by net worth, reasonable assurance on these disclosures is mandatory from the financial year 2023-24.
- Goal: Provides a foundational step for larger companies as they move towards full BRSR Comprehensive reporting.
Benefits: A Multifaceted Advantage
BRSR offers numerous benefits for both companies and stakeholders.
Companies can leverage BRSR to:
- Enhance Brand Reputation:Demonstrating a commitment to ESG principles fosters trust and attracts environmentally and socially conscious investors.
- Mitigate Risks:Proactive ESG strategies help companies identify and manage environmental and social risks, leading to improved operational efficiency.
- Attract Top Talent:A focus on sustainability resonates with a growing pool of talent seeking purpose-driven workplaces.
Stakeholders benefit from:
- Increased Transparency:BRSR reports provide a clear picture of a company's sustainability performance, allowing for informed decision-making.
- Data-Driven Investment:Investors can use BRSR data to make well-rounded investment choices based on ESG factors.
- Promoting Sustainability:BRSR encourages responsible business practices, contributing to a more sustainable future for India.
Reporting Nuances: Striking a Balance
The BRSR framework is structured into three main sections:
| 1. General Disclosures |
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| 2. Management and Process Disclosures |
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| 3. Principle-wise Performance Disclosures |
|
BRSR mandates reporting on 140 questions categorized into essential and leadership indicators. The essential indicators (98) are mandatory, ensuring core sustainability aspects are reported. Leadership indicators (42) are voluntary, allowing companies to showcase advancements in specific areas. This balanced approach fosters comprehensiveness while encouraging innovation.
The Road Ahead: A Sustainable Trajectory
The introduction of BRSR heralds a new era for corporate sustainability in India, with several promising developments on the horizon:
Role of Chartered Accountants in ESG Reporting
| Role | Description |
|---|---|
|
Assurance Providers |
Conduct audits to ensure accuracy and reliability of ESG disclosures. |
|
Advisors |
Guide companies on ESG best practices and reporting standards. |
|
Risk Managers |
Identify and assess ESG-related risks to enhance risk management strategies. |
|
Compliance Monitors |
Ensure companies adhere to relevant ESG regulations and reporting requirements. |
|
Data Analysts |
Analyze ESG data to provide actionable insights for decision-making. |
|
Ethical Leaders |
Promote ethical practices and corporate responsibility within organizations. |
In conclusion, the BRSR framework serves as a powerful tool for driving positive change in Indian corporations. By mandating comprehensive ESG disclosures, it not only enhances transparency and accountability but also drives operational efficiency and improves risk management. As more companies embrace this framework, India is poised to become a global leader in responsible business practices, paving the way for a sustainable and inclusive future. Chartered Accountants play a crucial role in verifying, guiding, and enhancing the integrity of ESG reporting, helping companies navigate the complexities of sustainability disclosures.
Disclaimer:
“The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received, or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation.”
Author:
Bhairavi B Yellurkar
Prepared On:
24/01/25
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