Published on 28th February, 2023
Talks about environmental care, social equity, and economic welfare have been around for decades now. We are nearing a stage where we shift our primary focus from spreading awareness about it to formulating concrete policies, setting the right procedures, and keenly monitoring its progress. Companies' compliance with the BRSR (Business Responsibility and Sustainability Reporting) framework will become a catalyst for this change.
Business Responsibility and Sustainability Reporting (BRSR) is a vital step towards achieving sustainable development. The increasing focus on environmental care, social equity, and economic welfare has made it imperative for companies to align their business practices with the goal of sustainable development. In this regard, the Securities and Exchange Board of India (SEBI) has made it mandatory for the top 1000 listed companies (by market capitalization) to comply with the BRSR framework from FY 2022-23, and recommendatory for FY 2021-22.
BRSR requires companies to make annual disclosures about their Environment, Social, and Governance (ESG) parameters, linking their financial results to their ESG performance. The framework is based on the National Guidelines for Responsible Business Conduct (NGRBC), which consists of nine principles that must be incorporated into the management policies of a company. These principles are then translated into procedures that are implemented throughout the organization, extending to its value chain partners as well.
Disclosures under each NGRBC principle are required, and its reporting is divided into essential and leadership indicators. The essential indicators are required to be reported on a mandatory basis, while the reporting of leadership indicators is on a voluntary basis.
BRSR uses a two-format approach, with Comprehensive BRSR developed for the top 1000 companies listed in India and BRSR Lite developed for unlisted companies unfamiliar with sustainability reporting. The comprehensive format includes 300 scores (225 essential indicators and 75 leadership indicators) while the BRSR Lite format is easier for smaller companies to adopt and will be implemented in phases, encouraging more companies to begin sustainability reporting.
In the startup world, the implementation of BRSR can have a significant impact. Adopting the BRSR framework will enable startups to enhance their image, create strong brand loyalty among customers and stakeholders, lower operation costs, and produce higher revenues. It will also improve financial and investment opportunities, minimize carbon risk and improve energy efficiency, and increase employee retention and recruitment. By incorporating sustainability into their business practices, startups can contribute to the overall impact of sustainability on the economy.
BRSR is an essential tool for companies, including startups, to demonstrate their commitment to sustainable development. The framework provides a roadmap for companies to align their business practices with the goal of sustainable development, while providing investors and other stakeholders with the information they need to make informed decisions.
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