With rising concerns around Environmental, Social and Governance (ESG) challenges, companies have shifted focus to sustainability aspects. The stakeholders expect stronger action in ESG governance, investors demand comparable ESG data, and clients increasingly demand ESG-aware partners. Adding to it, the potential for economic stability and long-term growth has pushed the Government to introduce measures to strengthen responsible business practices.
One such key initiative is the Business Responsibility and Sustainability Report or BRSR. Discover what BRSR reporting is, more details about it and why it has become essential for businesses today.
What is the Business Responsibility and Sustainability Report (BRSR)?
In 2021, the Securities and Exchange Board of India (SEBI) introduced the Business Responsibility and Sustainability Reporting (BRSR) framework. It mandates the top 1000 listed companies to disclose their ESG performance in a quantitative, standardised and comparable format from FY 2022-23 onwards. The framework is based on the nine principles of the National Guidelines on Responsible Business Conduct (NGRBC). It requires companies to report on essential and optimal leadership indicators.
BRSR Reporting Formats Under India’s ESG Reporting Framework
The Ministry of Corporate Affairs (MCA) and SEBI introduced three formats under the BRSR framework. Each format serves a different category of companies depending on their size, readiness, and regulatory requirements. Here are the insights into the BRSR reporting frameworks:
BRSR Comprehensive
It is the primary and most detailed sustainability reporting structure. It is mandatory for all obligated entities. SEBI may extend its applicability to certain unlisted companies in the future based on defined thresholds of turnover or paid-up capital.
BRSR Lite
MCA introduced BRSR Lite to enable small or non-listed companies to work on ESG without facing heavy compliance burdens. This version has fewer disclosures than the Comprehensive format.
Also, it is meant for companies below a certain threshold, which is yet to be defined by SEBI. BRSR Lite is voluntary for businesses. Adopting it helps gain familiarity with sustainability reporting and prepares them gradually for more detailed disclosures in the future.
BRSR Core
SEBI introduced BRSR Core in 2023 to further strengthen the credibility and consistency of ESG disclosures. It is a subset of the Comprehensive format and hence focuses on nine essential ESG attributes. BRSR Core requires reasonable assurance, making it compulsory for companies to obtain verification from a third-party assurance provider. It ensures the reliability of ESG data and increases investor confidence.
SEBI has mandated a phase implementation of BRSR Core:
- Top 150 listed companies (by market capitalisation) must report in BRSR Core from FY 2023-24
- Top 250 listed companies must disclose their value-chain ESG footprint from FY 2024-25 and obtain assurance on a comply or explain basis from FY 2025-26
- Coverage will gradually expand to 1000 companies by FY 2026-27
Components of the Business Responsibility and Sustainability Report (BRSR)
BRSR is structured into three major sections, each designed to help companies disclose their ESG readiness, policies and performance. These sections of BRSR reporting are mentioned below:
General Disclosures
This section provides a basic profile of the company and sets the context for the report. The details to be covered here are:
- Company introduction and business operationsÂ
- Stock exchanges where the company is listed
- Reporting boundaryÂ
- Details of products and servicesÂ
- Location of plants, offices and other operational facilities
- Employee information, including:
- Diversity and inclusion dataÂ
- Employee turnoverÂ
- Number of women and differently abled employeesÂ
Purpose: To give stakeholders a clear picture of the company’s identity, structure and people footprint.
Management and Process Disclosures
This section demonstrates the company’s alignment with the NGRBC. Companies must disclose the following details in this section:
- Existing policies that align with NGRBC
- Approval status of such policies by leadersÂ
- Method of implementing these policiesÂ
- Associated measurable and time-bound goals linked to responsible business conductÂ
- Relation with publicly available policy documents as per the applicabilityÂ
Purpose: To show the company’s intent, governance and commitment to responsible and ethical operations.
Principle Wise Performance Disclosures
It is the largest and most detailed section of the BRSR report. Companies must demonstrate their performance against the nine NGRBC principles along with quantitative data as proof. Each of these nine principles is evaluated through the two indicators mentioned below. They convert the principles into measurable metrics for transparent reporting. The two types of indicators are:
- Essential indicators: These are mandatory and required for all companiesÂ
- Leadership indicators: These are voluntary and set for companies aiming to demonstrate advanced or higher commitment to sustainability
The principle wise performance disclosures under BRSR are stated as follows:
- Act ethically and transparently while being accountable for the conduct and governanceÂ
- Promote the well-being of the employees’
- Ensure manufactured and marketed goods and services are safe and sustainableÂ
- Respect, protect and promote human rightsÂ
- Understand, act and respect the stakeholders’ interests, including the vulnerable, disadvantaged and marginalised sectionsÂ
- Take responsibility when engaging in influencing public and regulatory policyÂ
- Direct the actions toward environment protection and preservationÂ
- Contribute to inclusive growth and equitable developmentÂ
- Certainly and responsibly deliver value to customersÂ
Purpose: To present actions, outcomes, progress and challenges enabling yearly performance tracking.
Importance of Business Responsibility and Sustainability Report (BRSR)
BRSR reporting is a right addition to businesses to showcase their ESG measures. We cover its importance right here:
Offers Structured Reporting
Introduction of BRSR Comprehensive and BRSR Lite helps businesses report sustainability performance as per their size and readiness. Large and obligated entities use the detailed Comprehensive format, while smaller and non-listed companies can voluntarily use BRSR Lite. This structured approach ensures every business can participate in ESG reporting without being overwhelmed.
Enhances Transparency and Accountability
BRSR reporting enables companies to disclose clear and standardised ESG information. It helps stakeholders in informed decision-making. The transparency further builds trust and strengthens the company’s accountability towards sustainability practices.
Helps Gain Competitive Advantage
Organisations adopting BRSR get the benefit of attracting investors focused on sustainability. It also helps them appeal to consumers seeking responsible brands. Early adopting businesses often benefit from enhanced market positioning and access to new business projects.
Encourages Innovation
Businesses need to improve and innovate their products and services to align with sustainability for BRSR. It helps businesses in growth while enabling them to launch novel offerings for the customers.
Operational Efficiency and Cost Savings
Tracking the ESG performance offers insights into areas for resource optimisation, waste reduction and energy savings. Taking appropriate measures helps comply with sustainability while reducing costs and increasing the efficiency of business operations.
Reduces Risk
The early identification of the issues allows businesses to take timely measures. It prevents major negative impacts. Additionally, compliance with BRSR protects from the associated risks in different functionality areas of the business.
Conclusion
BRSR reporting plays a crucial role in providing a clear and structured framework for ESG reporting. It enables companies to enhance transparency, manage risks proactively and improve operational efficiency. Beyond regulatory compliance, BRSR reporting also offers strategic advantages to businesses. These include stronger stakeholder trust, competitive positioning and opportunities for innovation. Adopting BRSR helps businesses become resilient while contributing to long-term value creation.