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What is the News?
Federation of Indian Chambers of Commerce and Industry (FICCI) organised a side event in Glasgow at the COP26 to discuss the role of ‘Business Responsibility and Sustainability Report’ (BRSR) in driving climate actions in India.
What is the Business Responsibility and Sustainability Report (BRSR)?
Securities and Exchange Board of India (SEBI) introduced Business Responsibility and Sustainability Report (BRSR) as a reporting mechanism in May, 2021.
Purpose: It is a standardised reporting format that aims to encourage companies to go beyond regulatory financial compliance and report on their social and environmental impacts.
Impact: The reporting of BRSR will make it easier for regulators and investors to obtain a fair estimate of overall business stability, growth and sustainability. It will also give a baseline to draw comparison between environmental, social and governance (ESG) goals across companies and sectors.
Further, they may also help strengthen the climate commitments, accelerate decarbonisation and attract green investment for businesses.
|Environment, social and governance (ESG) aspects were first incorporated in the business models in India in 2009 with the introduction of national voluntary guidelines by the Ministry of Corporate Affairs (MCA). The latest framework, BRSR, is believed to be more comprehensive and relies more on quantitative disclosures.|
Companies Covered: At present, the top 1,000 listed entities (as per market capitalization) have to voluntarily disclose the required information according to the new standards in the financial year 2021-2022. It is mandatory for the same companies to report according to BRSR in the next financial year (2022-2023).
What are the drawbacks of BRSR reporting?
Firstly, there is no benchmark against which the parameters are to be assessed. The indicators will be of no use for a common stakeholder and just act as another data point, without a benchmark for reporting of key performance.
Secondly, the information available will be company-specific and not plant-specific. Therefore, a biased picture may be generated from the parameters such as carbon emissions.
Source: This post is based on the article “BRSR disclosure pathway to green companies: Indian industry lobby at CoP26” published by Down To Earth on 17th November 2021.