On 11th August 2020, the Indian Ministry of Corporate Affairs (MCA) released the report of the Committee on Business Responsibility Reporting (BRR). In the report, the Committee recommended a new two-format reporting framework called ''Business Responsibility and Sustainability Report (BRSR)''.
The Business Responsibility and Sustainability Report (BRSR) provides guidelines for the preparation of Business Responsibility Reporting for listed and unlisted companies in India. The Committee’s new Framework takes into consideration the global developments in non-financial sustainability reporting, which increasingly require businesses to be responsible and sustainable towards the environment and society.
Background
In March 2019, the Indian Ministry of Corporate Affairs (MCA) released the National Guidelines on Responsible Business Conduct (NGRBC) which was developed in line with the UN Guiding Principles for Business and Human Rights (UNGPs) and the UN Sustainable Development Goals (SDGs). The NGRBC provides the first framework on Business Responsibility Reporting in India that takes into consideration the UNGPs and SDGs as its key drivers.
BRR framework contained in the NGBRC is called the SEBI-BRR Framework. The Securities and Exchange Board of India (SEBI) is a government-owned regulator of the securities and commodity market in India. As per SEBI’s Listing Regulations, the top 1000 listed companies valued by market capitalisation are mandated to file Business Responsibility Reports (BRR) as a part of their annual report.
On the date the NGRBC was released, the MCA also established the Committee on Business Responsibility Reporting (BRR) to further develop the BRR framework for listed and unlisted companies.
The New Framework
In the Report, the Committee recommended a new business responsibility reporting framework called “Business Responsibility and Sustainability Report (BRSR)”, which was developed based on the SEBI-BRR Framework.
The BRSR framework uses a two-format approach: i. Comprehensive BRSR and ii. BRSR Lite. The first format, namely Comprehensive BRSR, has been developed for the top 1000 companies listed in India and may be extended to several unlisted companies that meet specified thresholds of turnover and/or paid-up capital.
The second format, namely BRSR Lite, has been developed for unlisted companies unfamiliar with the preparation of sustainability reporting. The BRSR Lite format will encourage more companies to begin sustainability reporting as it is easier for all companies to adopt this format. The adoption of BRSR Lite would be voluntary for such companies.
The MCA would work closely with SEBI to implement the Business Responsibility and Sustainability Report (BRSR) framework in India. Implementation of reporting requirements would also be done in phases.
Way Forward
The new Framework was developed as a simple and comprehensive source of non-financial and sustainability information while also seek to lessen the reporting burden and cost of compliance borne by businesses. The formats were also developed with the view of electronic filing integration to the MCA21 database.
The BRSR Framework is India’s response to the emerging trend of Responsible Business and increasing trends of Environmental, Social, and Governance (ESG) investing. From investors’ perspectives, the adoption of sustainability-centric reporting for companies in India would make India a more attractive destination for investments. The Global demand for non-financial reporting is growing as business operations are experiencing a paradigm shift from investors’ perspective, who put much greater importance on non-financial reporting.
For India, the Report is a major milestone to align the country’s sustainability progress and Indian companies’ aspiration for a greater foothold in the global economy.
To Read More:
- Official Report of the Committee on Business Responsibility Reporting
- India’s National Guidelines on Responsible Business Conduct (NGRBC)