Understanding India’s Business Responsibility and Sustainability Reporting (BRSR)

India's dynamic business environment has transitioned from a niche interest to a central component of corporate strategy.

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A key driver of this shift is the Business Responsibility and Sustainability Reporting (BRSR) framework. If you're a leader in a manufacturing, retail, or any listed company, comprehending BRSR reporting is no longer optional.

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This guide will demystify BRSR, explaining its structure, requirements, and why it's a critical tool for your company's long-term success.

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What is India’s Business Responsibility and Sustainability Reporting (BRSR)?

The Business Responsibility and Sustainability Reporting (BRSR) is India's mandatory ESG (Environmental, Social, and Governance) disclosure framework, introduced by the Securities and Exchange Board of India (SEBI). Think of it as a standardized report card that details how a company is performing on various sustainability aspects, moving beyond just financial numbers.

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Evolution from BRR to BRSR

BRSR isn't an entirely new concept; it's an evolution.

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It builds upon earlier initiatives, notably the Business Responsibility Report (BRR), which SEBI introduced in 2012. The BRR was largely qualitative. 

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Recognizing the global trend and stakeholder demand for more concrete and comparable data, SEBI developed BRSR.

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This newer framework emphasizes quantifiable metrics and aligns Indian reporting with international standards like the Global Reporting Initiative (GRI) and the Task Force on Climate-Related Financial Disclosures (TCFD). The shift from BRR's 36 questions to BRSR's approximately 140 data points signifies a move from CSR as philanthropy to ESG as a core business strategy component.

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Key milestones in India's sustainability reporting evolution

India's journey towards comprehensive sustainability reporting has seen several important developments, marking a clear progression:

• 2009: The Ministry of Corporate Affairs (MCA) laid the initial groundwork by publishing its Voluntary Guidelines on Corporate Social Responsibility.
• 2011: The MCA issued the National Voluntary Guidelines (NVGs), offering a more structured framework for businesses' social, environmental, and economic responsibilities.
• 2012: A significant step was taken when SEBI mandated the Business Responsibility Report (BRR) for the top 100 listed companies by market capitalization. This was the first mandatory ESG-related reporting for a segment of Indian companies.
• 2016: The BRR mandate was extended to the top 500 listed companies, thereby broadening the scope of mandatory ESG disclosure.
• 2019: The NVGs evolved into the more comprehensive National Guidelines on Responsible Business Conduct (NGRBCs). Concurrently, SEBI further widened the BRR scope to include the top 1000 listed companies, signalling the increasing importance of responsible business conduct.
• 2021: SEBI introduced the Business Responsibility and Sustainability Reporting (BRSR) framework, which replaced the BRR. It was made mandatory from the financial year 2022-23 for the top 1000 listed firms.
• 2023: To strengthen the framework further, BRSR Core parameters were introduced. This initiated a phased implementation of mandatory reasonable "assessment or assurance" for key BRSR Core Key Performance Indicators (KPIs).

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Core Objectives of BRSR

The primary goals of BRSR reporting are multi-faceted. It aims to:

• Enhance businesses' transparency and accountability regarding their ESG impacts.
• Enable comparability of ESG performance across companies and sectors.
• Help investors make informed decisions using non-financial insights.
• Encourage companies to integrate sustainability into their core business strategies.
• Align Indian corporate reporting with globally accepted sustainability frameworks.

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What is BRSR? A deeper look

BRSR is SEBI's standardized reporting format designed to help companies articulate their performance on sustainability and responsible business practices.

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It’s structured around the nine principles of the National Guidelines on Responsible Business Conduct (NGRBC). These principles cover a wide spectrum:

1. Conducting business with ethics, transparency, and accountability.
2. Providing goods and services that are safe and contribute to sustainability.
3. Promoting the well-being of all employees, including those in their value chains.
4. Respecting the interests of, and being responsive to, all stakeholders.
5. Promoting and respecting human rights.
6. Respecting, protecting, and making efforts to restore the environment.
7. Engaging in influencing public and regulatory policy responsibly.
8. Promoting inclusive growth and equitable development.
9. Engaging with and providing value to consumers in a responsible manner.

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BRSR Formats: Comprehensive, Core, and Lite

To cater to different needs and varying levels of reporting maturity, BRSR comes in a few variations:

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BRSR Comprehensive

This detailed format is designed for the top 1000 listed companies by market capitalization. It requires extensive disclosures across a wide array of ESG parameters.

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BRSR Core

This is a focused subset of the BRSR Comprehensive framework. It includes a limited set of key performance indicators (KPIs) related to core environmental, social, and governance attributes.

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Importantly, disclosures under BRSR Core are subject to mandatory reasonable "assessment or assurance." It's crucial to understand that BRSR Core is an integral part of the BRSR Comprehensive framework for these companies, not a separate standalone report.

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BRSR Lite

This simplified and condensed version of the BRSR is aimed at smaller companies, including unlisted entities, and those new to sustainability reporting. Its adoption is voluntary and encouraged to help these companies begin their ESG reporting journey.

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The introduction of BRSR Core with mandatory verification is strategic. It ensures the credibility of the most critical ESG data points, like emissions and water usage, while allowing companies time to build robust systems for the broader BRSR framework.

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How does BRSR work? The reporting structure

BRSR reporting is a structured annual exercise. The report itself is organized into three main sections, each with a distinct focus and set of requirements.

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Section A: General Disclosures

This initial section of the BRSR report is designed to capture fundamental information about the company. It sets the context for the more detailed sustainability disclosures that follow. 

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Companies are required to provide details such as their Corporate Identity Number (CIN), industry classification, a description of their primary products and services, the number and nature of their operational locations, and comprehensive employee data.

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This employee data often includes statistics on gender diversity, the number of differently-abled employees, and information pertaining to Corporate Social Responsibility (CSR) activities.

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Section B: Management and Process Disclosures

In this section, companies delve into their governance structures, policies, and processes as they relate to sustainability and responsible business conduct. This part of the report demonstrates how ESG considerations are embedded within the organization's leadership and operational framework. Key information required includes details on board oversight of ESG matters. These policies align with the nine NGRBC principles, the mechanisms and frequency of stakeholder engagement, methods for grievance redressal, and the processes for identifying and managing ESG-related risks.

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Section C: Principle-wise Performance Disclosures

This is the most detailed and substantive part of the BRSR. Here, companies must report their performance against each of the nine NGRBC principles. This reporting involves providing both qualitative narratives (explaining approaches and contexts) and quantitative data (specific metrics and figures) on various indicators related to each principle.

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For example, under Principle 6 (Environment), companies would report on GHG emissions, energy and water consumption, and waste management. Under Principle 3 (Employee Well-being), disclosures would cover aspects like occupational health and safety measures and employee training initiatives.

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Within Section C, disclosures for each principle are further categorized into:

• Essential Indicators: These are mandatory for reporting by all companies falling under the BRSR mandate. There are 98 such indicators, establishing a baseline for compliance and ensuring a minimum level of disclosure on key ESG aspects.
• Leadership Indicators: These are voluntary, comprising 42 indicators. They allow companies to showcase proactive and advanced sustainability practices that exceed the minimum requirements.

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This dual structure of essential and leadership indicators is a thoughtful mechanism. It guarantees a minimum standard of disclosure across all mandated companies while simultaneously encouraging and recognizing companies' pioneers in sustainability.

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What are the requirements of BRSR? Key ESG parameters

Complying with BRSR involves addressing approximately 140 questions. Key ESG parameters include a wide array of disclosures.

Environmental Disclosures

Companies need to report on several environmental aspects:

• Greenhouse Gas (GHG) Emissions: Disclosure of Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased electricity) is mandatory. Companies are also encouraged to report Scope 3 emissions (other indirect emissions, particularly relevant for value chain impacts).
• Energy Consumption: Details on total energy consumed, broken down by renewable and non-renewable sources.
• Water Usage and Footprint: Information on total water withdrawal, consumption, and percentage recycled/reused. Water stress areas and withdrawal from them are key considerations.
• Waste Management: Data on total waste generated, including hazardous and non-hazardous waste, and how it's managed (recycled, reused, disposed of). Emphasis on circularity initiatives.
• Biodiversity Impact: Disclosures related to the company's impact on biodiversity, particularly if operating in or near ecologically sensitive areas.
• Climate Change Initiatives: Information on strategies, targets, and actions to mitigate climate change and adapt to its impacts.
• Intensity Ratios: Companies must report intensity ratios for GHG emissions, water consumption, energy intensity, and waste intensity.

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Social Disclosures

The social dimension covers a broad range of topics:

• Employee Well-being: Metrics on employee health and safety (including mental health access), training, parental benefits, accessibility for differently-abled employees, and the percentage of unionized workers.
• Human Rights: Focus on due diligence processes, policies on minimum and fair wages, and prevention of human rights violations within the company and its value chain.
• Inclusive Growth: Policies and initiatives favouring vulnerable and marginalized groups, and details on job creation, particularly in smaller towns.
• Responsible Consumer Engagement: Procedures for handling consumer complaints and feedback, product recall mechanisms, and cybersecurity and data privacy policies.
• Community Engagement: Information on investments and initiatives for social and environmental impacts on communities.

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Governance Disclosures

Governance disclosures focus on ethical conduct and oversight:

• Ethical Business Conduct: Disclosures on anti-corruption, anti-bribery policies, and mechanisms for managing conflicts of interest.
• Board Diversity: Information on the composition of the board, including gender and other diversity aspects.
• Risk Management: Details on ESG-related risk management processes.
• Responsible Public Policy Engagement: Listing trade and industry affiliations and details on issues relating to anti-competitive conduct.

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Value Chain Disclosures and Assurance

A significant aspect is Value Chain Disclosures, applicable from FY 2025-26, requiring companies to report on ESG aspects of key upstream and downstream partners. "Assessment or assurance" for these value chain disclosures will be required from FY 2026-27. BRSR Core disclosures already require "assessment or assurance" on a phased basis, enhancing the credibility of key data.

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When does BRSR become mandatory? Implementation timelines

SEBI has adopted a phased approach for BRSR implementation:

• BRSR Comprehensive: This became mandatory for the top 1,000 listed companies in India by market capitalization from the financial year 2022-23 onwards.
• BRSR Core (Applicability & Assessment/Assurance): The requirement for BRSR Core disclosures, along with their "assessment or assurance," is being rolled out progressively to cover the top 1,000 listed entities:
  
  • FY 2023-24 applies to the top 150 listed entities.
  • This extends to the top 250 listed entities for FY 2024-25.
  • FY 2025-26 will cover the top 500 listed entities.
  • Finally, for FY 2026-27, all top 1,000 listed entities will be included.
• Value Chain Disclosures Timeline: ESG disclosures for the value chain will become applicable from FY 2025-26. The "assessment or assurance" for these value chain disclosures will be required from FY 2026-27 onwards.

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SEBI actively encourages voluntary adoption by other listed and unlisted companies, helping them prepare for potential future mandates and reap early benefits.

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Who needs to comply with BRSR?

The compliance requirements for BRSR extend to several categories of companies:

• Primary Obligation: The direct mandate for BRSR compliance rests with India's top 1,000 listed companies, determined by their market capitalization.
• Value Chain Partners: While not directly mandated to file their own BRSR reports with SEBI, companies forming part of the value chains of these top 1,000 entities will be increasingly involved. This includes suppliers, distributors, and other key business partners who must provide ESG performance data to their larger corporate customers. This indirectly impacts unlisted companies and Small and Medium Enterprises (SMEs).
• Voluntary Adopters: SEBI also encourages other listed companies (beyond the top 1,000) and even unlisted companies to adopt BRSR reporting voluntarily. This proactive approach can be driven by various strategic reasons, such as enhancing investor relations, building brand reputation, or preparing for future regulatory expansions.

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BRSR reporting creates a cascading effect, driving sustainability practices throughout the Indian business ecosystem.

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Why should you care about BRSR? Strategic benefits

Embracing BRSR reporting offers significant strategic advantages. It's more than a compliance task; it's an opportunity for growth and resilience.

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• Enhanced Transparency & Accountability: By openly disclosing ESG performance, companies can build stronger trust and credibility with investors, customers, employees, and the wider community.
• Improved Investor Confidence & Access to Capital: Investors are increasingly integrating ESG factors into their decision-making. Robust BRSR reporting can make a company more attractive to this growing pool of ESG-focused investors, potentially leading to better valuations and easier access to capital.
• Better Risk Management: The BRSR process helps companies identify, assess, and manage a wide range of ESG-related risks, including those associated with climate change, resource scarcity, and labour practices.
• Competitive Advantage: Strong ESG performance, showcased through BRSR, can differentiate a company from its peers, especially in global markets where ESG compliance is often a prerequisite.
• Driving Sustainable Development: Integrating sustainability into core business strategy, as encouraged by BRSR, fosters innovation, operational efficiency, and long-term resilience.
• Strengthened Stakeholder Trust: Transparent reporting improves relationships with customers who prefer sustainable brands and employees who want to work for responsible companies.
• Future-Proofing Your Business: Proactively engaging with BRSR prepares companies for the evolving regulatory landscape and shifting market expectations.

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Neglecting BRSR can lead to reputational damage and increased regulatory scrutiny. Conversely, proactive engagement can catalyze internal transformation and unlock value.

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How can Arbor help you with BRSR?

Navigating BRSR reporting can be complex.

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Arbor's platform simplifies this journey:

• Centralized Data Collection & Management: Our platform allows you to consolidate all your ESG data, environmental, social, and governance, from various sources into a single, auditable repository.
• Automated Calculations & KPI Tracking: We help automate the computation of key BRSR metrics, including Scope 1 and 2, and Scope 3 reporting of GHG emissions.
• Standardized Reporting & Framework Alignment: Arbor generates BRSR-aligned reports efficiently, mapping your collected data directly to the BRSR format.
• Value Chain Sustainability Management: Our tools facilitate data collection from your key upstream and downstream partners, helping you integrate this into your BRSR report.
• Streamlining Assurance/Assessment: We ensure your ESG data is structured, transparent, and audit-ready, making the BRSR Core verification process smoother.
• Ensuring Compliance & Reducing Burden: Arbor's platform is designed to stay updated with evolving BRSR requirements, minimizing manual effort and reducing error risk.
• Decision-Grade Analytics & Insights: Go beyond reporting with powerful dashboards and analytics, gaining actionable insights to drive improvements and strategy.

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Investing in a platform like Arbor is a strategic move for efficiency, accuracy, and competitive advantage in BRSR reporting.

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Summary

India's Business Responsibility and Sustainability Reporting (BRSR) framework is a pivotal regulation transforming corporate sustainability disclosure. For the top 1,000 listed companies, robust BRSR reporting is now a necessity, driving transparency and accountability.

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While challenging, the strategic benefits of BRSR reporting, from investor confidence to risk management and brand reputation, are substantial. It's a catalyst for aligning with global best practices and contributing to India's sustainability goals.

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Proactive and robust engagement with the BRSR framework is crucial for future success.

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Start your BRSR reporting with Arbor

Turn compliance into a competitive advantage. See how Arbor's intelligent sustainability platform can simplify your journey.

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