On May 10, 2021, the Securities and Exchange Board of India (SEBI) issued a circular implementing new sustainability-related reporting requirements for the top 1,000 listed companies by market capitalization. New disclosure will be made in the format of the Business Responsibility and Sustainability Report (BRSR), which is a notable departure from SEBI's existing Business Responsibility Report and a significant step toward bringing sustainability reporting up to existing financial reporting standards.

Continue reading for more details on the disclosure requirements in the new BRSR format.

The new BRSR format is based on the nine principles of the Indian government's "National Guidelines on Responsible Business Conduct" (the "RBC Guidelines"), which are intended to define responsible business conduct for Indian companies. The RBC Guidelines are driven by leading international standards and practices including the UN Guiding Principles on Business and Human Rights, UN Sustainable Development Goals, the Paris Agreement and the ILO Core Conventions. The principles address a range of sustainability matters including business ethics and transparency, human rights, environmental safety and fair labor practices.

Reporting under each principle is divided into essential indicators, which are mandatory obligations, and leadership indicators, which operate on a voluntary basis. Some of the key disclosure requirements (under either essential or leadership indicators) are tabulated below:

Aspects Disclosure requirements Principles
General
  • An overview of the company's material ESG risks and opportunities and approach to mitigate or adapt to the risks, together with relevant financial implications
  • Sustainability related goals and targets and related performance
  • Management structures, policies and processes related to sustainability
 General management and process disclosures
Environment
  • Resource usage (energy and water) and intensity metrics
  • Air pollutant emissions
  • Greenhouse gas emissions (Scope 1, Scope 2 and Scope 3)
  • Waste generated and waste management practices
  • Impact on bio-diversity
 Principle 6: Businesses should respect and make efforts to protect and restore the environment
Social
  • Employees
    • Gender and social diversity including measures for differently-abled employees
    • Turnover rates
    • Median wages
    • Welfare benefits to permanent and contractual employees
    • Occupational health and safety
    • Trainings

Principle 3: Businesses should respect and promote the well-being of all employees, including those in their value chains

Principle 5: Businesses should respect and promote human rights
  • Communities
    • Social Impact Assessments
    • Rehabilitation and Resettlement
    • Corporate Social Responsibility
 Principle 8: Businesses should promote inclusive growth and equitable development
  • Consumers
    • Product labelling
    • Product recall
    • Consumer complaints in respect of data privacy, cyber security etc
 Principle 9: Businesses should engage with and provide value to their consumers in a responsible manner
Governance
  • Training on the principles in the RBC Guidelines for members of the Board, senior managers and employees
  • Anti-corruption and anti-bribery policies
  • Awareness programs conducted for value chain partners on the principles in the RBC Guidelines
 Principle 1: Businesses should conduct and govern themselves with integrity, and in a manner that is Ethical, Transparent and Accountable.

The new reporting requirements promote transparent, standardized disclosures on ESG parameters and sustainability-related risks and opportunities among listed companies in India. This approach will help companies better demonstrate their sustainability objectives, position and performance to the market, resulting in long-term value creation and increasing the ability of investors to make informed ESG-related decisions.

BRSR reporting will be voluntary for FY 2021-22 and mandatory from FY 2022-23 for the top 1,000 listed companies by market capitalization. This is to provide companies subject to these requirements with sufficient time to adapt to the new requirements. Companies are encouraged, however, to adopted the BRSR early in order to be at the forefront of sustainability reporting.The new reporting requirements promote transparent, standardized disclosures on ESG parameters and sustainability-related risks and opportunities among listed companies in India. This approach will help companies better demonstrate their sustainability objectives, position and performance to the market, resulting in long-term value creation and increasing the ability of investors to make informed ESG-related decisions.

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