Feb 05 2024

Decoding BRSR: A Business Guide to India's New ESG Reporting Mandate

Decoding BRSR: A Business Guide to India's New ESG Reporting Mandate

If you're a business leader in India, chances are you've heard the buzz around BRSR. Introduced by the Securities and Exchange Board of India (SEBI) in May 2021, BRSR is a new reporting framework that requires the top 1,000 listed companies by market capitalization to disclose their environmental, social, and governance (ESG) performance in a standardized format.

But BRSR is more than just another reporting exercise. It's a paradigm shift in the way companies think about and communicate their impact on society and the environment. It's a recognition that businesses have a responsibility not just to their shareholders, but to a wide range of stakeholders - from employees and customers to communities and the planet.

So what exactly does BRSR entail? At its core, BRSR is a comprehensive framework that covers a wide range of ESG topics - from greenhouse gas emissions and waste management to diversity and inclusion, human rights, and corporate governance. Companies are required to report on their policies, processes, and performance in each of these areas, using a set of standardized disclosures and key performance indicators (KPIs).

But BRSR is not just about ticking boxes. It's about driving meaningful change and accountability in corporate sustainability practices. Here's why it matters:

It raises the bar for ESG disclosure: BRSR represents a significant step up from the previous Business Responsibility Report (BRR) framework, which was voluntary and limited in scope. By making ESG disclosure mandatory and comprehensive, BRSR aims to create a level playing field and enable more informed decision-making by investors, consumers, and other stakeholders. It aligns with global best practices: BRSR is closely aligned with leading international reporting frameworks such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-related Financial Disclosures (TCFD). This makes it easier for Indian companies to benchmark their performance against global peers and attract international capital. It drives business value: Beyond compliance, BRSR can help companies identify opportunities for cost savings, risk mitigation, and innovation in sustainability. By integrating ESG considerations into core business strategy and operations, companies can build resilience, enhance reputation, and create long-term value for all stakeholders. But navigating BRSR can be complex, especially for companies that are new to ESG reporting. Here are a few key steps to get started:

Assess your ESG maturity: The first step is to understand where your company stands on the ESG spectrum. This means conducting a thorough assessment of your current policies, processes, and performance across all BRSR indicators. Identify gaps and areas for improvement, and benchmark your performance against industry peers and best practices.

Engage your stakeholders: BRSR is not just about reporting to regulators, but about engaging with a wide range of stakeholders on ESG issues. This means conducting materiality assessments to identify the ESG topics that matter most to your business and stakeholders, and engaging in ongoing dialogue and collaboration to drive progress on these issues.

Strengthen your ESG governance: Effective ESG reporting requires strong governance and accountability mechanisms. This means establishing clear roles and responsibilities for ESG management, setting targets and KPIs, and integrating ESG considerations into risk management, internal controls, and executive remuneration.

Leverage technology and data: BRSR reporting can be data-intensive and time-consuming, especially for large and complex organizations. Investing in robust ESG data management systems and reporting tools can help streamline the process, improve data quality and consistency, and enable more sophisticated analysis and insights.

Communicate transparently and continuously improve: BRSR is not a one-time exercise, but an ongoing journey of transparency, accountability, and continuous improvement. This means reporting regularly and transparently on your ESG performance, seeking independent assurance to enhance credibility, and using the insights and feedback from your reporting to drive better sustainability outcomes over time.

As someone who has [helped dozens of Indian companies navigate the BRSR landscape / built software tools to streamline BRSR data management and reporting / whatever your relevant background is], I've seen firsthand the challenges and opportunities of this new era of ESG disclosure. It's not a easy road, but one that is increasingly necessary and rewarding.

By embracing BRSR, companies can not only meet regulatory requirements, but also build trust with stakeholders, attract responsible investors, and contribute to a more sustainable and inclusive economy. They can be part of the solution to the great challenges of our time - from climate change and biodiversity loss to social inequality and human rights.

But this will require a fundamental shift in mindset and culture - from seeing ESG as a compliance burden to seeing it as a core driver of business value and societal impact. It will require leadership, innovation, and collaboration across the corporate landscape.

The road ahead may be uncertain, but the destination is clear - a future where businesses are not just profitable, but also responsible and sustainable. A future where the interests of shareholders and stakeholders are aligned in the pursuit of long-term value creation. A future where India is a global leader in ESG performance and disclosure.

BRSR is not the end of the journey, but the beginning. And it's up to all of us - businesses, investors, regulators, and civil society - to make it a success. Let's rise to the challenge, and build a better, brighter, and more sustainable future for all.

The time for action is now. Let's get started.

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