SEBI has prescribed the format for the Business Responsibility and Sustainability Report (“BRSR”):
1. BRSR is applicable on top 1000 listed companies the reporting of BRSR shall be voluntary for FY 2021–22 and mandatory from FY 2022–23.
2. How consultants can help:
- Implementing BRSR standards in the enterprise;
- Guidance for Integrated Reporting;
- Reviewing of ESG compliances envisaged by BRSR;
- Preparation of BRSR Report as per ICAI Guidance Note
S. No. Detailed Compliance Scope
1. Integration of BRSR with applicable Ind AS
2. Integration of BRSR with Companies Act specially with CSR compliance, Directors Report, Internal Audit Report, CARO, 2020, Secretarial Audit Report and other audit reports, if any, mandated under the Law
3. Integration of BRSR with SEBI Norms such as LODR, UFTP, and other associated norms
4. Integration of BRSR with applicable Labour Laws as stipulated by BRSR Questionnaire
5. Integration of BRSR with applicable Environmental Issues as stipulated by BRSR Questionnaire
6. Synchronization of information from the following departments/ committees:
a) Vigil Mechanism
b) Nomination and Remuneration Committee
c) Public Relations department
d) Stakeholders Committee
e) Risk Management Committee
f) Internal Audit function
g) Audit Committee
7. BRSR requirements need to be synchronized with:
1. directors & obligations under section 166(2) of the Companies Act, 2013;
2. directors & responsibility statement under section 134(3)(c) of the Co. Act, 2013;
3. directors & reporting as enshrined in section 134(3)(m) to (p) of the Co. Act, 2013;
4. Rule 8 of the Companies (Accounts) Rules, 2014;
5. Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014;
6. all twenty-one clauses of CARO, 2020
8. Defining and Deciding Reporting Boundary i.e., disclosures under this report to be made on a
standalone basis (i.e., only for the entity) or on a consolidated basis
9. Guidance as to the implementation of principles under which the BRSR is required to be done under Regulation 34(2)(f) of LODR Regulations vide Gazette notification no. SEBI/LAD- NRO/GN/2021/22 dated May 05, 2021:
The non-financial disclosures which are from an Environmental, Social and Governance (& ESG & quot;) perspective, are sought under nine principles for measuring the performance of the businesses in the area of business responsibility and sustainability. The principles with respect to which the
disclosures have to be made under BRSR are the same as in BRR. Environmental aspects:
i. Business should provide goods and services in a manner that is sustainable and safe
ii. Business should respect and make efforts to protect and restore the environment Social aspects:
i. Businesses should respect and promote the well-being of all employees, including those in their value chains.
ii. Business should respect the interest of and be responsive to all its stakeholders
iii. Businesses should respect and promote human rights
iv. Businesses should promote inclusive growth and equitable development
Governance aspects:
i. Businesses should conduct and govern themselves with integrity in a manner that is ethical, transparent and accountable
ii. Business, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent.
iii. Businesses should engage with and provide value to their consumers in a responsible manner
10. Discussions with Management for identifying and reporting Stakeholders’ Group (including Vulnerable & Marginalized Group, Customers, Value Chain Partners, Media Partners, etc.) vis-à-vis the requirements of NGRBC Principles
11. Discussions with Management for identifying and laying down (if required) processes for consultation between stakeholders and the Board on economic, environmental, and social topics
12. Discussions with Management for identifying and reporting sustainability issues pertaining to environmental and social matters that present a risk or an opportunity to business
13. Drafting and Reviewing BRSR Charter, BRSR Policies vis-à-vis the requirements of NGRBC Principles and mapping the same in accordance with Companies Act and SEBI-LODR
14. Discussions with Management for establishing “ESG and BRSR Committee” vis-à-vis the requirements of NGRBC Principles
15. Independent assessment/ evaluation of the working of its policies vis-à-vis the requirements of NGRBC Principles ~ furnishing of report on the same as per ICAI Norms and ISAE 3000
16. Discussions with Management for providing details regarding public policy advocacy and engagement
17. Discussions with Management for providing details regarding the benefits derived and shared from the intellectual properties owned or acquired by your entity (in the current financial year), based on traditional knowledge
18. Related Party Transactions and BRSR:
1. related party sales transactions can have a value-destroying effect. It is thus important that those transactions be reviewed and disclosed properly to ensure that such transactions are conducted in the best interest of stakeholders;
2. certain RPTs may show a short-term, value-enhancing effect, but these transactions may also result in subsequent tunnelling activities, suggesting managerial opportunism in the long term.
19. Sustainability Disclosure Standards The IFRS Foundation announced the formation of a new International Sustainability Standards Board namely ISSB and the IFRS Sustainability Disclosure Standard in climate will be a game- changer and change how organizations report their risks and opportunities.
It will therefore be important for companies to plan now for the potentially rapid implementation of proposed sustainability disclosure standards
20. Transition from BRR to BRSR
21. Guidance on Adoption of NGRBC
To have the nine NGRBC principles in line with the organizations strategy and policies, and not as a separate additional standalone system. The principles should become the integral part of the overall behavior of the company.
22. Business Responsibility Reporting Framework (BRRF)
BRSR is a format for reporting the corporate responsibility of the organization. It is made as three sections A, B and C. Section A has general information related to the organization, its product or services, financial and ownership details. Section B has a list of all the policies, procedures, and strategies against each of the nine principles as a matrix. There is a total of 18 questions, of which 1 to 5 are about the policies, 6 to 10 are on governance, leadership and oversight, 11 to 14 on stakeholder engagement, and 15 to 18 on communications. Section C contains the principle wise
indicators and targets segregated as two columns of Essential and Leadership that the organization needs to choose.
23. Business Case Matrix
It is a matrix on which the nine NGRBC principles are mapped against six business benefits as given below. The matrix shows the potential benefits that can be achieved against each of the principle:
a) Revenue growth and market access
b) Cost savings and productivity
c) Access to capital
d) Risk management
e) Human capital
f) Brand/ Reputation
24. Compliance with the SEBI’s Guidance Note for Business Responsibility and Sustainability Reporting Format
25. Guidance vis-à-vis ESG Rating Agencies queries 1
[ESG rating and index providers] 2 are a common source of data on ESG risks and opportunities. Some providers offer ESG data as a subset of their traditional financial data analysis, while others
1 https://www.livemint.com/market/mark-to-market/esg-theme-for-stocks-to-accelerate-in-2022-11641747303323.html
2 https://www.sebi.gov.in/reports-and-statistics/reports/jan-2022/consultation-paper-on-environmental-social-and-governance-esg-rating-providers-for-securities-markets_55516.html
specialize in ESG data only. ESG data providers may cover all asset classes or focus on an area or category only.
26.
- Assistance in Disclosure compliance including Annual Report
- Assistance in responding to the queries of Statutory Auditors
- Review and Revision in Articles of Association (AOA) of the company
- Review of all the policies applicable under Companies Act, 2013 and SEBI LODR and
