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BRSR Reporting is probably a new avatar to a legacy of other sustainability reports and surely India will benefit from such a sustainability reporting format. The top 1,000 listed companies by market capitalization must file a BRSR-compliant report to the Securities and Exchange Board (SEBI) of India before March 31, 2023.

Sustainability reporting was introduced to Indian businesses more than a decade ago. In 2011, the Ministry of Corporate Affairs (MCA) released the National Voluntary Guidelines (NVG) on the Social, Environmental, and Economic Responsibilities of Business. The NVG is aligned with the UN Millennium Development Goals (UNMDGs). Taking a cue from the NVG, the Security and Exchange Board of India (SEBI) introduced the Business Responsibility Report (BRR) in 2012. The Securities and Exchange Board of India (SEBI) is the regulatory body for the securities and commodity market in India under the ownership of the Ministry of Finance within the Government of India, established on 12 April 1988 as an executive body and was given statutory powers on 30 January 1992 through the SEBI Act, 1992.

The BRR is the first Environment, Social, and Governance (ESG) regulatory disclosure framework in India – it precedes the current Business Responsibility and Sustainability Reporting (BRSR) requirements. Eventually, BRR’s relevance faded, owing to rapid global developments also, an NSE report (2018) revealed that the BRR Reports lacked quality, rendering the reporting unreliable. BRR faded because it didn’t talk about the environment. Corporate social responsibility is a business model by which companies make a concerted effort to operate in ways that enhance rather than degrade society and the environment. CSR helps both improve various aspects of society as well as promote a positive brand image of companies.

The world has already seen a surge in international standards that asks companies to account comprehensively for its effect on the environment like their greenhouse emissions, life cycle impacts of their products, etc.  Realizing the issue of environment and social governance, the MCA adopted the National Guidelines for Responsible Business Conduct (NGRBC) in 2020. Subsequently, SEBI replaced BRR with Business Responsibility and Sustainability Reporting (BRSR), formulated by an MCA committee on BRR.

Further, if we see among the many frameworks, GRI, CDP, SASB, and TCFD are the most widely used. The Global Reporting Initiative (GRI) was established in 1997 to create an accountability framework for companies to display to their stakeholders their responsible environmental business practices. The Sustainability Accounting Standards Board (SASB) is an independent non-profit, whose mission is to develop and disseminate sustainability accounting standards that help public corporations disclose material, decision-useful information to investors. The Task Force on Climate-Related Financial Disclosures (TCFD) was created in 2015 by the Financial Stability Board (FSB) to develop consistent climate-related financial risk disclosures for use by companies, banks, and investors in providing information to stakeholders. The Science Based Targets initiative (SBTi) drives ambitious climate action in the private sector by enabling organizations to set science-based emissions reduction targets.

The Carbon Disclosure Project (CDP) began in 2000 and aimed to create a global economic system that protects against climate change. The Sustainability Accounting Standards Board (SASB) began in 2011 to develop standards that display both sustainability and financial fundamentals. The Taskforce on Climate-related Financial Disclosures (TCFD) came about in December 2015 in an effort to further consider the climate in the global financial system. India is the first country in the world to make corporate social responsibility (CSR) mandatory, following an amendment to the Companies Act, 2013 in April 2014. Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger as part of any CSR compliance.

When we look at the evolution process,

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Finally, the Introduction of the Business Responsibility and Sustainability Report (BRSR) to India in May 2021.

NGRBC suggests two versions for BRSR reporting – “Comprehensive” and “Lite”. The ‘Comprehensive Version’ of reporting is for listed organizations, and the ‘Lite Version’ is for unlisted companies. For now, SEBI has mandated that India’s top 1000 listed companies (by market capital) submit the comprehensive version of BRSR for FY 2022-23.

A unique advantage of following BRSR requirements is that it adopts the United Nations Sustainable Development Goals (UN-SDGs) and is benchmarked with other global ESG reporting frameworks like Global Reporting Initiative (GRI), Task Force on Climate-Related Financial Disclosures (TCFD), etc.

Once companies are reporting in line with the BRSR framework, investors will have a better, standardized view of how the businesses they are evaluating live up to their promises and add yet another benchmark that can help them distinguish the wheat from the chaff. They must peel the onion and look beyond flowery disclosures that talk about qualitative measures and processes, and investigate whether companies are truly living up to their claims. Investors must engage in dialogue with companies and communicate the need for impact measurement, and require companies to showcase the results of their efforts in order to bring Indian businesses to the forefront by using reporting standards that are useful on a global stage.

The growing salience of non-financial disclosures along with annual financial disclosures ensures that the business explicitly recognizes its environmental and social responsibilities. As sustainability disclosures grow in eminence, it is hoped that the information would be used by banks, credit rating agencies, and other financial institutions, along with financial information to assess the credibility of a company/business. It is to see whether the BRSR gains acceptability and credence among frameworks as a singular source of information for companies reporting in India, such that they serve as a primary document for the assessment of businesses as has been hoped by the regulators.