Keywords: BRSR, Sustainability, Corporate Reporting, ESG, Sustainable Development Goals (SDG)

*Background *
In recent years, there has been a growing global focus on sustainability and responsible business practices, driven by urgent environmental challenges, social inequalities, and increased transparency in governance. Climate change, underscored by initiatives such as the Paris Agreement, has compelled businesses to adopt environmentally conscious practices. Simultaneously, the rise of ESG (Environmental, Social, and Governance) investing has shifted investor priorities from solely financial metrics to include non-financial performance indicators. Frameworks like the United Nations Sustainable Development Goals (UN SDGs), the Global Reporting Initiative (GRI), and Integrated Reporting (IR) have stressed the importance of corporate accountability to various stakeholders, beyond just shareholders, including employees, communities, customers, and the environment. In response to these global trends, India introduced the Business Responsibility and Sustainability Report (BRSR) as a significant step toward aligning with international sustainability standards.

Introduction to BRSR
BRSR is a reporting framework introduced by the Securities and Exchange Board of India (SEBI) to promote ESG disclosures by corporates. It is designed to align corporate reporting with the global demand for ESG disclosures and ensure that companies disclose their non-financial performance and financial results. The BRSR framework is a comprehensive tool that encourages businesses to go beyond regulatory compliance and engage meaningfully with stakeholders on key environmental, social, and governance issues. As per SEBI circular, from FY 22-23, only the top 1000 listed companies (by market Capitalisation) in India are mandated to publish BRSR report as part of their Annual Report.
Evolution of BRSR:

However, SEBI has now introduced new guidelines mandating ESG disclosures under the BRSR Core framework w.e.f. F.Y 23-24 for the top 1000 listed companies by market capitalisation. BRSR Core is a focused subset of Business Responsibility and Sustainability Reporting (BRSR) framework, based on nine key ESG attributes, provides for corporate reporting and specifies the requirement for the assurance of data. The implementation of mandatory assurance or assessment for these disclosures will follow a phased approach. From FY 2024-25, the top 250 listed companies as per market capitalisation will be required to ensure reasonable assurance or assessment for BRSR Core metrics.
From FY 2025-26 (Previously FY 2024-25), ESG disclosures for value chains will become mandatory for the top 250 companies on voluntary basis (earlier comply-or-explain basis), with limited assurance or assessment becoming compulsory from FY 2026-27 (Previously FY 25-26). Under the new guidelines, companies are required to disclose ESG information encompassing their value chains, including their top upstream and downstream partners, individually representing 2% of their purchases and sales by value.

Framework of BRSR
The BRSR guidelines emphasize structured reporting across three main sections:
SECTION A: General Disclosures
• Focuses on company demographics, ownership, and operational details.
• Provides foundational information for stakeholders.
SECTION B: Management and Process Disclosures
• Details the organization’s policies, governance, and processes related to ESG integration.
• Addresses the strategic approach to sustainability.
SECTION C: Principle-Wise Disclosures
The Business Responsibility and Sustainability Report (BRSR) framework is based on the Nine Principles of the National Guidelines on Responsible Business Conduct (NGRBC) issued by the Ministry of Corporate Affairs. These principles serve as a foundation for businesses to demonstrate their commitment to environmental, social, and governance (ESG) responsibilities.
Below are the 9 Principles of BRSR:

1.Businesses should conduct and govern themselves with integrity and in a manner that is ethical, transparent, and accountable.
This principle emphasizes the significance of ethical behaviour and transparency in business operations. Organizations are expected to uphold high standards of integrity, adopt ethical practices, and ensure accountability for their actions. Additionally, they should maintain transparency in their activities, operations, and financial reporting.

2.Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle.
This principle underscores the need for sustainable and safe production practices. Businesses should aim to reduce the environmental impact of their operations while ensuring that their products and services are safe for both consumers and the environment.

3.Businesses should respect and promote the well-being of all employees, including those in their value chains.
This principle highlights the significance of employee well-being. Businesses should ensure safe and healthy working conditions, offer fair wages, and provide opportunities for career growth to all employees, including those within their value chains, such as suppliers, contractors, and temporary workers.

4.Businesses should respect the interests of and be responsive to all stakeholders.
This principle emphasizes the value of stakeholder engagement. Businesses should take into account the interests and perspectives of all stakeholders, including shareholders, employees, customers, suppliers, and the communities they serve. They should actively respond to stakeholder concerns and feedback to foster trust and collaboration.

5.Businesses should respect and promote human rights.
This principle underscores the importance of respecting and promoting human rights. Businesses should uphold fundamental rights, including freedom of expression, association, and privacy, while taking proactive measures to prevent and address human rights violations within their operations and value chains.

6.Businesses should respect, protect, and restore the environment.
This principle highlights the importance of environmental stewardship. Businesses should reduce their environmental impact, conserve natural resources, and foster sustainability. Additionally, they should take proactive measures to restore and rehabilitate ecosystems that have been degraded.

7.Businesses, when engaging in influencing public and regulatory policy, should do so in a responsible manner.
This principle emphasizes the importance of responsible advocacy. Businesses should participate in policy advocacy transparently and ethically, ensuring their actions do not compromise the public interest or undermine the democratic process.

8.Businesses should promote inclusive growth and equitable development.
This principle highlights the importance of fostering inclusive and equitable economic development. Businesses should generate economic opportunities for all, particularly for disadvantaged and marginalized groups. Additionally, they should contribute to local community development and support social and economic empowerment.

9.Businesses should engage with and provide value to their customers in a responsible manner.

This principle emphasizes the importance of responsible consumer engagement. Businesses should offer safe, high-quality products and services, ensuring they are marketed and sold ethically. They should also maintain transparency, providing consumers with the necessary information to make informed decisions.

Salient Features of BRSR:

1.ESG-Centric Reporting: BRSR emphasizes Environmental, Social, and Governance (ESG) factors to assess a company's sustainability, focusing on environmental impact, social responsibilities, and governance practices.
2.Comprehensive Disclosures: It combines qualitative and quantitative reporting, covering various different factors such as energy use, waste management, employee welfare, and anti-corruption measures to track and communicate sustainability efforts.
3.Global Alignment: The framework aligns with international standards like GRI, TCFD and UNSDG, enhancing India's appeal for ESG-focused investments.
4.Stakeholder Focus: BRSR highlights the impact on all stakeholders, fostering trust and enhancing corporate reputation.
5.Value Chain Inclusion: Companies must account for ESG impacts across their entire value chain, promoting holistic responsible practices.
6.Flexibility for SMEs: While mandatory for top 1000 listed companies, smaller companies can voluntarily adopt a lite version, easing their transition into structured ESG reporting.

Key Challenges in BRSR Implementation
Although BRSR marks a significant progress in corporate sustainability reporting, its implementation poses certain challenges. Companies may face the following obstacles in complying with SEBI’s guidelines:
• Data Collection: Many organizations, especially smaller ones, may lack the systems or expertise necessary to gather the detailed ESG data required for BRSR reporting, making it difficult to meet SEBI’s expectations.
• Compliance Costs: Adopting new sustainability initiatives and reporting processes can incur substantial costs, particularly for companies that have not previously focused on ESG matters. Striking a balance between the cost of compliance and the long-term benefits of transparency is essential.
• Awareness Gaps: While BRSR is mandatory for the top 1,000 companies, many smaller businesses may not be fully aware of the advantages of voluntarily adopting the framework. Increasing awareness and building capacity for BRSR reporting will be crucial for broadening its impact.

Conclusion:
In conclusion, the BRSR framework represents a crucial step toward enhancing transparency and accountability in the Indian corporate sector, aligning with global sustainability standards. By mandating detailed ESG disclosures, it empowers businesses to demonstrate their commitment to responsible practices and fosters trust with a wide range of stakeholders. The phased introduction of mandatory assurance and value chain disclosures ensures that companies take a comprehensive approach to sustainability, extending their impact beyond immediate operations to their suppliers and customers.
With its alignment to international frameworks, BRSR also opens doors for ESG-driven investments, contributing to the growth of a sustainable economy. BRSR Framework enables the companies to showcase their dedication to ethical governance, environmental sustainability, and social responsibility, positioning themselves for long-term success in an increasingly ESG-focused world.

References
Menghnani, Bhawana, S. Babu, and F. Head. "Business Responsibility and Sustainability Reporting (BRSR)–An Exploratory Study." Proceedings of the International Conference on Industrial Engineering and Operations Management. 2022.
Karpagam, M. "IMPACT OF BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING ON FINANCIAL PERFORMANCE OF LARGE-SCALE COMPANIES THROUGH COMPARATIVE STUDY OF BRR AND BRSR."
Debnath, Pranesh, and Rishav Kanoo. "Business Responsibility and Sustainability Reporting: A Way Forward for Indian Corporate Disclosure." 2021,
https://www.sebi.gov.in/legal/circulars/jul-2023/brsr-core-framework-for-assurance-and-esg-disclosures-for-value-chain_73854.html
https://www.sebi.gov.in/media-and-notifications/press-releases/dec-2024/sebi-board-meeting_90042.html

Learn More at
Visit our websites: https://www.climate-change.in/
Twitter: https://x.com/climate_impact4
LinkedIn: https://www.linkedin.com/company/climatechangeservices
Facebook: https://www.facebook.com/GlobeTrend.climate.change
Instagram : https://www.instagram.com/climate_impact4?igsh=aXlleGs3ZzZsMWxu