Adoption Of BRSR Framework Supports Firms In Pursuing Sustainability Goals

The global business landscape is undergoing a profound transformation, with an increasing emphasis on sustainability and corporate responsibility. In this matter, the Business Responsibility and Sustainability Report (BRSR) framework, introduced by the Securities and Exchange Board of India (SEBI) in 2021, stands out as an important instrument for driving environmental, social, and governance (ESG) performance among identified listed companies in India.

Understanding the BRSR Framework 

The BRSR framework has evolved significantly since its inception, gaining accelerated momentum and relevance. In March 2023, it underwent a crucial update, now encompassing disclosure and assurance on select core key performance indicators (KPIs) across nine ESG attributes.

The BRSR Core applies specifically to the top 1000 listed companies in India (by market capitalization) and their value chains, ensuring a far-reaching impact (see Figure 2 for SEBI-prescribed timeline for disclosure and assurance adoption).

Preparing BRSR disclosures requires the Board of the listed company to have oversight obligations related to identification, assessment, decision-making, and disclosure of the company’s ESG-related risks and performance metrices. The Board has the ultimate responsibility to comply with BRSR Core disclosure and assurance requirements – including ascertaining the expertise and independence of the ESG assurance provider.

An experienced assurance provider with relevant expertise across diverse sustainability topics is essential for undertaking the mandated reasonable assurance of BRSR Core disclosures; and will in the process deliver multiple benefits for the company. 

Advantages of BRSR Core Disclosures 

Enhanced Consistency and Transparency 

One of the hallmark features of the BRSR Core is its provision of a standardised reporting structure and guidance for relevant disclosures and their assurance. This standardisation is pivotal, as it not only ensures consistency but also comparability of ESG disclosures across industries and sectors. This, in turn, empowers stakeholders such as investors, customers, and regulators to dissect and comprehend a company's sustainability performance, thereby fostering informed decision-making. 

Beyond compliance, the true strength of BRSR Core disclosures lies in the heightened transparency they deliver. Through these disclosures, companies can offer stakeholders a comprehensive view of their operations beyond traditional financial reporting – enabling them to build trust and aligning the company's values with the interests of its stakeholders. 

Operational Improvement and Risk Mitigation 

BRSR Core disclosures can serve as a catalyst for companies to identify operational risks and opportunities. It spotlights areas where companies can refine their operations, reduce their environmental footprint, enhance labor policies and practices, and fortify corporate governance structures. This knowledge enables companies to monitor their progress towards sustainability goals and make informed decisions for continual improvement.

Reputational Enhancement 

In the era of heightened social and environmental awareness, a company's reputation is one of its most invaluable assets. By disclosing BRSR Core information consistently, companies can demonstrate a dedication to responsible business practices, thereby strengthening their brand reputation.

Year-on-year transparency empowers companies to proactively shape a positive image that can help the company to attract talent, boost employee morale by demonstrating a commitment to social and environmental responsibility, foster stronger relationships with suppliers, reduce supply chain risks, and build trust among shareholders committed to the long-term sustainability of the business.

Benefits of Assurance of BRSR Core Disclosures 

Confidence and Credibility 

A distinguishing feature of BRSR Core requirements is that the top 1000 listed companies (by market capitalization) must undertake assurance for their Core disclosures. This assurance is indispensable in instilling stakeholders with confidence in the accuracy and reliability of the disclosed information.  

Reasonable Assurance: A Higher Standard 

Within assurance, reasonable assurance sets a higher standard. It requires independent third-party auditors to gather sufficient and appropriate evidence to underpin their conclusions. The auditing process for reasonable assurance includes thorough testing, in-depth analysis, and comprehensive documentation based on relevant Assurance Standards – offering a level of confidence that limited assurance cannot match. This approach provides additional assurance that effective processes are in place to identify and manage ESG risks and opportunities. 
 
Reputational Risk Mitigation 

Undertaking reasonable assurance of BRSR Core disclosures not only instills confidence but also helps companies mitigate reputational risks effectively. This commitment to transparency and scrutiny fortifies a company's reputation and further enhances its standing in the market. 

Conclusion 

Reasonable assurance requires companies to ensure that they have adopted and implemented robust data collection, validation, and quality control procedures. Additionally, companies need to provide training to employees and invest in data management systems and integration tools to standardize reporting across the organisation. 

In conclusion, embracing the BRSR framework and seeking reasonable assurance for core disclosures bestows a wide range of advantages – including heightened transparency, fortified reputational risk management, enhanced stakeholder engagement, and the provision of extra assurance for reported sustainability information. 

Through such disclosures, companies can devise more robust sustainability strategies, cultivate trust among stakeholders, and attract socially responsible investors. The adoption of the BRSR framework emerges as a clear pathway for companies to ingrain ESG principles into their business strategy and strive towards enduring sustainability goals. 

(Madhu Sudan Kankani, Partner, Deloitte India and Nachiketa Das, Director, Deloitte India.)