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Companies use Sustainability Reporting to look into how their business operations impact the economy, environment and society. This helps them think critically about their role in sustainability making sure they are open about the challenges and benefits they face. With increasing regulations, on social, environmental and governance (ESG) issues, the importance of this kind of reporting has increased to protect people's rights and the environment.

SEBI embraced global sustainability reporting early on, introducing the Business Responsibility Report (BRR) with ESG disclosures in 2012. In 2018, the MCA established a panel to finalize reporting formats aligning with the National Guidelines for Responsible Businesses, leading to the recommended adoption of Business Responsibility and Sustainability Reporting in 2020.  Beginning in 2022-23, BRSR is mandatory for the leading 1,000 firms based on market capitalization.

The BRSR is based on Business Responsibility Reporting (BRR) principles and the Guidelines on Responsible Business Conduct integrated with the Sustainable Development Goals set by the United Nations (SDGs). BRSR aims to provide a comprehensive and consolidated source of non-monetary sustainability data that is significant to associates such as investors, shareholders, regulators, and the general public.  Companies must invest in systems to choose relevant ESG standards, collect necessary data, develop appropriate frameworks and indicators, and determine the confidence level for reporting to meet BRSR reporting requirements. Several nations have set up sustainability reporting disclosures and global efforts on ESG reporting are rising. The EU Reporting Directive on non-financial matters and the International Sustainability Standards Board represent the worldwide trend towards sustainability disclosures with a focus on enterprise value. Businesses creating sustainability reports using globally recognised formats might refer to disclosures to prevent redundancy. Organizations are not limited in their capacity to provide detailed voluntary disclosures through integrated reporting or other sustainability report frameworks, notwithstanding mandatory reporting under BRSR. Integrating BRSR with international standards improves the quality and accuracy of sustainability disclosures, which benefits the global sustainability environment.

As the BRSR is a recently introduced framework a traditional literature review is not feasible.

Secondary Data is Used

1. Evolution

The movement against climate change and sustainable development is picking up speed around the world. As a result, companies are quickly changing how they report their environmental performance. Investors are playing a crucial role in driving this shift, creating a growing responsibility for companies to be transparent about their sustainability practices with their stakeholders. As a result, sustainability reporting frameworks have evolved, and companies across the globe are increasingly adopting them to measure, track, and report their performance in environmental, social, and governance (ESG).This trend is reflected in the fact that many countries worldwide have introduced and mandated ESG-related disclosures, underscoring the increasing importance of integrating sustainability considerations into corporate reporting practices.This table details the historical progression of ESG reporting in India, emphasizing key milestones and regulatory advancements in corporate responsibility and sustainability:

Figure 1: Growth of ESG reporting in India

Year	Milestone	Details
2009	.National Voluntary Guidelines (NVGs)	Issue of National voluntary guidelines on corporate social responsibility
2012	Business Responsibility Report (BRR)	Filing of BRR becomes compulsory for leading 100 listed companies
2014	Corporate. Social Responsibility (CSR)	CSR Rulesbecome mandatory
2015	Expansion to leading 500 Listed Companies	Filing BRR is enlarged to the leading 500 companies by market cap
2017	IR. (Integrated Reporting)	Proposal of voluntary adoption of Integrated Reporting by the leading 500 companies preparing BRR.
2019	NRBC.(National. Guidelines on Responsible Business Conduct)	NGRBC., issued in March 2019, guides on more responsible business practices
2019	Expansion to 1,000 Listed Companies	The BRR requirement was expanded to the leading 1,000 listed
2021	Business Responsibility and Sustainability Report (BRSR)	Introduction of BRSR

Source: MCA, Companies Act, 2013,SEBI

1.1   Business. Responsibility Report (BRR)

The Business Responsibility Report is a comprehensive document that lists a public company's commitment to ethical business practices and transparency with all stakeholders.This report is crucial for companies that have received funding from the public as they contain an interest in the public element and are required to provide detailed disclosures regularly. In 2012, SEBI mandated a specific format for the 'Business Responsibility Report,' making it compulsory for the leading 100 listed companies. While it is compulsory for these top companies, other entities are encouraged to voluntarily adopt the Business Responsibility Report framework to communicate their responsible business practices transparently. This report follows a standardized format and is integral to the Annual Report. It includes essential information about the company, its performance, processes, and insights into the principles and core elements of Business Responsibility Reporting. This report is a tool for companies to systematically communicate their efforts toward adopting responsible business practices, promoting accountability and alignment with ethical and sustainable business standards.

1.2 Business. Responsibility and Sustainability Report (BRSR)

SEBI has launched the Business Responsibility and Sustainability Report (BRSR) to adhere to international reporting standards, emphasizing the importance of reporting on environmental, social, and corporate governance aspects.The BRSR mandates Indian companies to furnish quantitative metrics on sustainability factors from April 2022 to March 2023. It replaces the Business Responsibility Reports (BRR) and is based on the nine principles encompassing ethical and responsible business practices.

i. Principle 1: Conduct with Integrity - Companies must operate honestly and uphold ethical principles. They should also be transparent and accountable for their actions.

ii. Principle 2: Stakeholder Respect and Responsiveness-It is essential for businesses to consider the concerns and needs of all parties involved and to be receptive to their opinions, recognizing their role and influence in the business environment.

iii. Principle 3: Responsible Policy Engagement- Businesses should use transparent and ethical practices while influencing public and regulatory policy.

iv. Principle 4: Sustainable and Safe Goods/Services - Businesses should sustainably provide goods and services, ensuring the well-being of society and prioritizing safety.

v. Principle 5: Human Rights Promotion - Businesses need to uphold and promote human rights by creating a working environment that respects and maintains the dignity and rights of individuals.

vi. Principle 6: Comprehensive and Equitable Development - Businesses must promote inclusive growth, address social disparities, and offer fair economic opportunities for a just society.

vii. Principle 7: Employee Welfare - Businesses need to prioritize the welfare of all employees, including those in their value chains.

viii. Principle 8: Environmental Protection -Companies are responsible for minimizing their environmental impact and taking steps to preserve and restore it

ix..Principle9: Responsible Consumer Engagement- Businesses should prioritize ethical marketing, sales, and customer engagement practices to provide responsible value.

 These principles outline a framework for ethical business conduct, emphasizing integrity, stakeholder engagement, responsible policy influence, sustainability, human rights, inclusive growth, employee well-being, environmental stewardship, and responsible consumer engagement. These principles guide businesses towards a more responsible and sustainable approach to the Environment, Social and corporate Governance framework.:

Table 2-ESG framework

Environmental	Social	Governance
"Reducing Energy Consumption and GHG/Scope Emissions"	- Employee well-being and health and safety practices	- Policies against corruption and bribery
-  Waste Handling	- Employee training	- Conflict management procedures
- Water Utilization and extraction	- Human rights adherence	- Employee retention policies
- Reduce, Reuse, Recycle practices	- Social impact assessments	- Remuneration policies
- Sustainable sourcing	- Gender equality at leadership levels	- Stakeholder engagement practices
- Product Stewardship.	- CSR activities and beneficiaries details

2. Recent Changes

The Business Responsibility and Sustainability Report (BRSR) represents a substantial enhancement over its predecessor, the Business Responsibility Report (BRR)The BRSR format includes several crucial improvements, including a guidance note to help companies better understand questionnaire elements, a greater emphasis on quantitative disclosures for a more detailed perspective, and the classification of essential and leadership indicators. Moreover, the BRSR includes questions related to a company's value chain and stakeholders, provides a lite version for smaller businesses, integrates with the MCA21 portal, and proposes the creation of a Sustainability Index. The report gains greater strength by aligning with Sustainable Development Goals (SDGs), allowing businesses to demonstrate their performance on SDG targets. These features aim to support a smooth transition from BRR to BRSR, using technology to make informed decisions and enabling stakeholders to evaluate companies based on their ESG performance and disclosures.

3. Advantages of BRSR

BRSR is a platform created to provide sustainability-related information to stakeholders in India. It aims to promote comparability among companies, particularly for investors.The goal of BRSR is to serve as a comprehensive source of non-financial sustainability information that is pertinent to all stakeholders in the businessincluding the general public, shareholders and investors.  Businesses may see BRSRas a regulatory requirement, but it can benefit them. The disclosure of environmental and governance  factors has demonstrated several advantages globally, such as:

1. Value Creation: Integrating ESG into a company's core business practices has outperformed peers worldwide. In India, the MSCI India ESG Leaders Index hasshown superior performance compared to the general market for over 12 years.

2. Market Entry and Expanded Market Share: Companies investing in social and environmental issues can provide them access to new markets, increase their market share, and improve their business continuity. This approach can also help strengthen their relationships with customers and business partners.

3. Access to Capital:  Investors are playing a significant role in implementing global reporting frameworks, such asthe Sustainability Accounting Standards Board (SASB), and Integrated Reporting.Investment Companiesare launching ESG funds which investbased on ESG performance. This has led to the growth of environmentally sustainable financial products and instruments.

4. "Social License to Operate": Companies can gain social acceptance by disclosing their plans and activities through sustainability reporting, which addresses the role of civil society and communities in providing the "license to operate."

5. Reduced Financial Risks:There has been a reduction in financial risks attributed to the increasing demand for transparency, legal actions against energy companies and heightened responsibility for disclosures related to pollution.  This has led global organizations like the World Bank to modify their investment strategies in response to environmental concerns.

6. Attracting and Retaining Talent:Companies prioritizing sustainability tend to attract and retain talent as employees prefer responsible behaviour and a clear purpose. Sustainability reporting helps communicate these practices and results, aligning with employee and consumer expectations.

4. Trends in BRSR & ESG Reporting in India

Numerous Indian enterprises are embracing the report as a means to highlight their sustainability initiatives. According to a recent Deloitte survey, 75% of Indian firms are presently revealing information about their sustainability and Environmental, Social, and Governance (ESG) performance.

 Prominent organizations such as Reliance Industries Limited (RIL), WIPRO,HCL and Tata Consultancy Services (TCS)are following the BRSR guidelines and revealing diverse sustainability metrics, includinggas release, water utilization, waste management, gender diversity, and corporate governance practices.

It is worth noting that RIL reported a significant reduction of 10% in greenhouse gas emissions compared to the previous year in their BRSR 2022 report. TCS has also experienced a positive impact by recruiting over 1 lakh people from economically disadvantaged backgrounds in the previous year. Sterlite Tech (STL) also achieved an 'A' rating from MSCI for their commendable efforts in environmental, social, and governance (ESG) practices.The extensive acceptance of BRSR among Indian firms is a favourable advancement for ESG reporting in the nation.

4.1 Technology-powered Reporting: Transitioning from Data to Insights using ESG Reporting Software

Effective reporting of ESG metrics and the attainment of net-zero objectives necessitate outstanding operational effectiveness and the smooth reporting of precise investment-grade ESG data. Indian enterprises are recognizing the transformative potential of digital solutions in their ESG and sustainability endeavours.Engaging cross-functional teams throughout the organization in ESG data reporting and utilizing data and metrics to evaluate and enhance sustainability performance, digital solutions play a critical role.Digital transformation streamlines ESG reporting, reducing time and costs while enhancing data accuracy. These solutions provide insights into ESG performance, allowing organizations to set ambitious goals and track progress, fostering impactful sustainability initiatives.

The reply of the 1,000 listed companies is in progress, meeting the stipulated BRSR requirements.The introduction of accounting principles and the assurance framework specified in the SEBI notification of July 2023 will enhance market confidence. This approach will guide businesses beyond the initial 150 companies toward a comprehensive understanding of assured non-financial performance data from FY24.

5. Challenges in Compliance

1. Data Gathering:

The process of collecting data for BRSR reporting is time-consuming and challenging. It involves gathering information from various internal and external sources, such as multiple organizational departments, supply chain partners, industry competitors, and third-party data providers.

2. Data Administration and Verification:

After data collection, there is a need for careful administration and verification to ensure accuracy, completeness, and reliability. Organizations commonly need help managing and verifying BRSR data, raising concerns about the complexity of this process.

3. Communication and Stakeholder Engagement:

Managing stakeholder relationships is a common issue in BRSR reporting. Effective communication and engagement are crucial for understanding stakeholder expectations, collecting relevant data, and building trust. However, balancing these aspects while advancing sustainability goals can be challenging due to numerous variables.

4. Measuring and Quantifying BRSR Factors:

Organizations often need help to evaluate and quantify the effectiveness of their sustainability programs due to the subjective nature of BRSR elements, a lack of standardized measurements, and the complexity of capturing intangible aspects.

ANNEXURE-1

Business Responsibility & Sustainability Reporting Format

[https://www.sebi.gov.in/sebi_data/commondocs/may-2021/Business%20responsibility%20and%20sustainability%20reporting% 20by%20listed%20entitiesAnnexure1_p.PDF]

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