In India's evolving ESG (Environmental, Social, and Governance) landscape, understanding the significance of BRSR (Business Responsibility and Sustainability Reporting) is becoming increasingly important. As companies recognize the need to incorporate sustainable practices into their operations, BRSR reporting is pivotal in showcasing their commitment to responsible business practices. It is essential for businesses to transparently share information about their environmental conservation efforts, social impact initiatives, and corporate governance practices. BRSR reporting offers a structured framework for companies to disclose their sustainability performance and demonstrate their efforts in contributing to a more sustainable future. By adopting BRSR reporting, companies can not only enhance their brand reputation but also attract investors who place a premium on ESG factors. Moreover, BRSR reporting allows businesses to identify gaps in their sustainability strategies, encouraging them to set tangible goals and take measurable actions towards a more sustainable and inclusive future.

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Development in ESG Reporting Framework in India

ESG stands for Environmental, Social and Governance. During ESG Reporting, a company has to be evaluated on these three parameters. A third-party certification body performs evaluation. It considers various factors that help to assess the company’s environmental status which includes the initiatives it took to conserve the environment. A company may affect the environment in many ways depending on the business it is dealing in. During this assessment, it is evaluated whether the company is following sustainable ways to operate and protecting the environment from unnecessary harm that the processes of the business may cause at distinct levels.

After the environment, the company is assessed on social and governance factors. In social evaluation, the company and its relationship with the stakeholders are evaluated. The policies are reviewed and validated to analyse factors like the status of employees, benefits provided to them, training framework, human rights policy and social welfare activities. The third and last evaluation is done to assess the governance within the company. It includes the evaluation of the decision-making system of the company, the board, transparency, business ethics, code of conduct etc. The updated BRSR Reporting framework includes these ESG parameters within its format and provides a consolidated reporting format for the businesses.

What is BRSR Reporting and Its Significance?

BRSR full form is Business Responsibility and Sustainability Reporting. It provides a format for the reporting of factors that shows the commitment of a business to fulfil its responsibility towards the environment and society along with the sustainable practices it is following in its daily operations. Under BRSR Reporting, the company can make various disclosures within a single report. There are general disclosures, management and process disclosures, and principle-wise performance disclosures. There are nine principles currently in the principle-wise disclosures-

• Conducting and governing themselves with integrity in an ethical, transparent and accountable manner
• Providing Goods and Services in a sustainable and safe manner
• Respecting and promoting well well-being of all employees
• Respecting the interests of and being responsible to all its stakeholders
• Respecting and promoting human rights
• Respecting and making efforts to protect and restore the environment
• Engaging in influencing public and regulatory policy in a responsible and transparent manner
• Promoting inclusive growth and equitable development
• Engaging with and providing value to their customers in a responsible manner

Benefits of ESG Reporting for Businesses

ESG reporting means the disclosure of detailed analysed, curated and comprehensive information about the functioning of a company. These details include various stats relating to environment, social and governance. ESG Reporting holds substantial importance for several reasons and provides the following benefits-

• Law Enforcement

Demand for transparency is continuously growing and greater emphasis is put on fulfilling environmental responsibilities and obligations. In India, ESG reporting plays a vital role in helping organizations prepare for disclosures and ensuring effective compliance with regulatory requirements as notified by the SEBI from time to time.

• Trust and Loyalty

It's evident how employees and customers contribute to organizations that resonate with their values and expectations about governance or sustainability. They tend to favour businesses that align with ESG initiatives and progress. With this, the businesses earn the trust of their clients as well as employees which is vital in the growth of the business.

• Tracking Growth

ESG reporting assists the stakeholders in tracking the company’s growth over the years on various parameters. It provides tangible evidence for evaluating ESG strategies and performance which further helps businesses to improve their ESG data by implementing necessary updates as and when required.

• New Experiments

Corporate disclosures in ESG reporting attract companies committed to innovating and improving their ESG practices. Reporting acknowledges areas needing enhancement and businesses are ready to experiment with new practices to improve the reports and attract the stakeholders for further business development.

Read Our Blog: What is Environmental, Social, and Governance (ESG)?

Future Prospects of ESG Reporting in India

In India, companies voluntarily share information about how they care about the environment, society, and good governance (ESG) voluntarily. But now, there are new rules that make it mandatory for the top 1000 big companies to do the same. The regulating authority is the Securities and Exchange Board of India (SEBI) which created the format of the Business Responsibility and Sustainability Report (BRSR). These guidelines say that companies have to share their ESG information starting this year. In May 2022, SEBI also made a special group called the ESG Advisory Committee to improve these guidelines and make it easier to rate and invest in ESG-friendly companies.

In February 2023, the Reserve Bank of India introduced new regulations aimed at promoting environmentally sustainable practices in the business sector. These regulations allow companies to make green deposits, which are deposits specifically earmarked for funding environmentally friendly projects. Furthermore, the regulations require companies to disclose information on financial risks associated with climate change and establish contingency plans to mitigate potential adverse impacts of climate change on their operations.

This is similar to what the European Union is doing with its strict rules on ESG disclosure. These rules in India are important because they help us understand how companies are doing when it comes to being environmentally and socially responsible, and they make it easier to compare different companies and see how they perform in these areas.

Read Our Blog: Transforming Sustainability: Exokirubg ESG Through Blockchain Technology

Conclusion

In conclusion, ESG reporting is gaining importance in India as companies embrace sustainability. The Business Responsibility and Sustainability Reporting (BRSR Reporting) framework showcases their commitment to responsible practices. It evaluates them on environmental, social, and governance aspects, promoting transparency and accountability. Mandatory for India's top 1000 companies, BRSR Reporting guidelines, supported by SEBI and an ESG Advisory Committee, align with global ESG trends. This reporting benefits businesses by ensuring compliance, building trust, tracking growth, and fostering innovation. It's a crucial step toward a more sustainable and responsible future for Indian companies.