The Securities and Exchange Board of India (SEBI) vide its press release dated 30th November 2015 has extended the applicability of Business Responsibility Reporting to top 500 listed entities based on market capitalization. Currently, only the top 100 listed entities based on their market capitalisation on BSE and NSE are mandatorily required to include Business responsibility reporting in their annual reports. The new regulation - SEBI(Listing Obligations and Disclosure Requirements) - would come into force from April, 2016.
BRR
Enterprises are increasingly becoming a crucial part of the society in which they operate. Their responsibility is not limited to the shareholders alone from the revenue and profitability perspective but also to the society at large which is also its stakeholder. Stakeholder involves all those individuals and group of individuals who can affect and are affected by the enterprise achieving its objectives. Hence, adoption of responsible business practices in the interest of the social set-up and the environment are as vital as their financial and operational performance. This is all the more relevant for listed entities which, considering the fact that they have accessed funds from the public, have an element of public interest involved, and are obligated to make exhaustive continuous disclosures on a regular basis. Ministry of Corporate Affairs, Government of India, in July 2011, came out with the 'National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business'. These guidelines contain comprehensive principles to be adopted by companies as part of their business practices and a structured business responsibility reporting format requiring certain specified disclosures, demonstrating the steps taken by companies to implement the said principles. These are based on Nine principles covering Business ethics, Product responsibility, Well being of employees, Stakeholder engagement, Human rights, Environment, Public policy, Inclusive development and Customer relations.
In August, 2012, SEBI in consideration of the voluntary guidelines and in the larger interest of public disclosure regarding steps taken by listed entities from a Environmental, Social and Governance ("ESG") perspective made it mandatory for the top 100 listed entities based on market capitalization to include Business responsibility report in their annual reports.
Extension Of Applicability
In order to ensure better compliance with corporate governance norms and widening the scope of stakeholder inclusiveness, SEBI has extended the applicability of BRR requirement to the top 500 listed entities on the basis of their market capitalization. The move is aimed at bringing more transparency in the activities of the business in the light of stakeholder relations to ensure disclosure of adoption of responsible business practices by a business to all its stakeholders.
Green Initiative
Presently, the BRR are required to be included in the annual reports of the listed company. However, in line with its responsibility towards the environment, SEBI as part of its green initiative to reduce paper use has stated that the BRR shall be placed on the website of the company and only the link of the same shall be given in the annual reports.
CONCLUSION
Business Responsibility Report has been designed as a tool to help companies understand the principles and core elements of responsible business practices and start implementing improvements which reflect their adoption in the manner the company undertakes its business. It leads to improved communication between the company and its stakeholders, improved investor satisfaction resulting in long term business sustainability. The guidelines would encourage enterprise not covered by the regulation to voluntarily disclose their socially responsible practices and activities. Responsible corporate activity can enhance the chance of business success, appraisal of business on international standards and also contribute to broad based economic benefit of the country in which they operate. BRR is not just a single example of corporate responsibility but is part of a trend that has been growing over the past few years
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