Business Responsibility and Sustainability Report (BRSR)

Business Responsibility and Sustainability Reporting (BRSR) has been in the news recently due to its increasing importance in the corporate world.

1. The Securities and Exchange Board of India (SEBI) has made BRSR mandatory for the top 1000 listed companies by market capitalization, and the reporting requirements are becoming more stringent.
2. The BRSR is a medium through which companies report their sustainability and ESG (Environment, Social and Governance) performance, and its implications are far-reaching.

Introduction:

1. Business Responsibility and Sustainability Reporting (BRSR) is a medium through which listed companies report matters concerning Sustainability and ESG (Environment, Social and Governance) in the non-financial disclosure part of the annual reports.
2. BRSR has evolved from the National Voluntary Guidelines for Responsible Business Conduct and is applicable to the top 1000 companies by market capitalization.

Key Features of BRSR:

1. BRSR Core: Focuses on nine key performance indicators, subject to reasonable assurance report by verifying professionals.
2. Assurance Requirement: Starts from the financial year 2023-24 for the top 150 companies, progressively extending to others.
3. Value Chain Disclosures: Top 250 companies will have to report on value chain disclosures from FY 2024-25, with assurance reporting on a limited assurance basis from 2025-26.

Challenges:

1. Interoperability: BRSR is not interoperable, requiring entities within a multinational ecosystem to tailor-make reports for each entity.
2. IT Systems: Current IT systems are not geared to capture relevant information, and there is a general lack of awareness and unpreparedness.
3. Shortage of Sustainability-Trained Personnel: A global phenomenon, leading to difficulties in preparing BRSR reports.
4. Digital Personal Data Protection Act, 2023: Companies must take a comprehensive look at their IT systems to comply with the Act.

Standards and Frameworks:

1. IFRS Sponsored ISSB's Standards: IFRS S1 and IFRS S2 have gained acceptance.
2. IFAC's Standards for Assurance: Now the norm, although not officially prescribed.
3. Greenhouse Gas Protocols: Measure GHG emissions, classified into Scope 1, Scope 2, and Scope 3.

Climate Change and Greenhouse Gases:

1. Scope 1, 2, and 3 Emissions: Measure emissions from own processes, energy bought, and value chain emissions.
2. Banks and Financial Institutions: Beginning to take interest in emissions of borrowers, with the RBI raising concerns about climate change risks.

International Organisation of Securities Commissions (IOSCO):

1. Established in 1983: Brings together the world's securities regulators, recognized as the global standard setter for financial markets regulation.
2. Objectives: Enhance investor protection, ensure markets are fair and efficient, and promote financial stability.

Securities and Exchange Board of India (SEBI):

1. Statutory Regulatory Body: Established by the Government of India in 1992.
2. Aims to Regulate Securities Market: Protects the interests of investors in securities.

Conclusion:

BRSR is a starting point, and businesses will face numerous challenges, including interoperability, IT system inadequacies, and a shortage of sustainability-trained personnel. Companies must take a comprehensive look at their IT systems, prepare BRSR reports on a continuous basis, and comply with emerging standards and frameworks. The implications of BRSR will be far-reaching, with a focus on sustainability, ESG, and climate change.