ESG Reporting as Per SEBI BRSR Guidelines in India

There is no doubt that the rise of ESG has sparked significant transformations on a global scale. As we observe the shifts and obstacles associated with the environmental, social, and governance aspects, it becomes evident that leaders must revaluate their strategies to align with corporate principles and address the themes introduced by stakeholders. This is particularly relevant in India, where the impact of ESG is becoming increasingly pronounced. By embracing these principles, leaders can navigate the complexities of ESG and ensure sustainable growth while meeting the expectations of their stakeholders.

According to the reports, as stated In July 2023, SEBI added new ESG metrics for mandatory disclosure under ‘BRSR Core’ for certain listed companies in India. The Business Responsibility and Sustainability Report (BRSR) format was initially introduced in May 2021 and replaced the previous Business Responsibility Report (BRR).

Besides, let us acquaint ourselves with ESG reporting as per SEBI BRSR in India and dive deep into the factors that dictate the same.

What is ESG Reporting?

ESG Reporting is a type of disclosure that focuses on an organization's efforts and progress in environmental, social, and governance activities. The primary purpose of such disclosures is to transparently record the company's ESG activities and encourage other organizations to do the same. Accordingly, the ESG framework mainly reports metrics involving Human rights policies, greenhouse gas emissions, and risk management strategies. 

In contrast, reporting is seen as a strategic way to demonstrate that an organization is meeting requirements and genuinely committed to ESG projects rather than making empty promises. An ESG report provides valuable insights into the progress achieved in environmental sustainability and corporate governance. It outlines the efforts made and their impact on the overall ESG data. Additionally, ESG reports serve as a means of communication, providing necessary information to regulatory authorities, employees, and investors.

How is BRSR Different from BRR?

The origins of ESG Requirements in India can be traced back to 2012 when the Securities and Exchange Board of India established it. At that time, the mandate was for the top 100 companies in India, focusing on market capitalization, to file a business Responsibility Report (BRR). Over time, this evolved into the BRSR, a reporting framework for ESG. This development has been crucial in helping to bridge the gap in accurately measuring the depth of reporting. As of 2021, this is a significant achievement.

The checklist for ESG Reporting consists of the following, which are as follows- 

• Having a team, that would manage or create an extensive framework, with a focus on the major issues, initiatives as well as other reporting-related standards. 
• Conducting a materiality assessment is essential to identify any sustainability and stakeholder issues in order to ensure their resolution..
• Constantly updating the ESG performance, while enabling them to take note of the installed business strategy. 
• Engaging expert resources and insights to provide ESG solutions, while meeting stakeholder reporting requirements.

Why ESG Reporting is considered significant for organisations?

ESG Reporting being the disclosure is considered significant due to the following reasons, which are as follows- 

• Brand loyalty

It goes without saying how employees contribute to the organizations, which aligns with their expectations or beliefs. Be it related to governance or sustainability; employees are head-bent on those who align with your ESG initiatives or progress.

• Innovation

ESG reporting being the corporate disclosures attracts businesses that embody innovation by aiming to enhance ESG practices. With reporting, we acknowledge the room for improvement, identify those key areas and encourage new initiatives that align with ESG. Such is how innovation takes birth and encourages efficiency and transparency. 

• Compliance

As the demand for transparency continues to increase, there is a greater emphasis on fulfilling environmental responsibilities and obligations in India. Additionally, the significance of ESG reporting must be balanced, as it enables organizations to prepare for disclosures and ensure regulatory compliance effectively.

• Measuring growth

Measuring growth is a crucial aspect that highlights the importance of ESG Reporting in India. It serves as evidence for evaluating ESG strategies and performance while also enabling the tracking of long-term goals over some time. This helps in enhancing language and rectifying any grammatical errors.

Therefore, brand loyalty, innovation, compliance and growth are the factors that reflect why ESG reporting is considered significant for the organizations.

Companies need to disclose their Environmental, Social and Governance Report annually which is commonly known as ESG Report. Corpseed assists businesses in evaluating various measures required to prepare the report and provide consultation regarding the same. Some major parts of the process are as follows-

• Step 1:- Review of Documents

A literary review is performed by the team for relevant documents, websites, reports, policies and plans which assist in evaluating the business deeply and making informed decisions about the ESG and Sustainability metrics.

• Step 2:- Field Inspection and Risk Identification

During the field inspection, the team interacts with the representative of the business and the labour force to assess the ground reality and based on the information assessed, inputs are provided in the ESG reporting. Potential risks and their financial impact are identified during the inspection and discussion with the management.

• Step 3:- Risk Mitigation and Enhancement

We consult businesses and assist them in mitigating any risk related to the business by suggesting necessary corrective measures and effective action plans. It can be associated with Environmental, Social, and Governance metrics. Through improved decision-making, we assist them to deliver more value by improving their effectiveness in all domains.

• Step 4:- ESG Reporting

Corpseed assists in the evaluation of the organisation based on various factors including environment, social, governance and sustainability. Based on the evaluation, the ESG and Sustainability Report is prepared by our team after thoroughly analysing the data collected during the inspection process and corrective action taken by the organisation if any.

The ESG disclosures for the value chain might consist of the following points, which include the following-

• The disclosures regarding the value chain have to be made or listed by the company based on the BRSR core since it talks about the aspect of the Annual report. It is understood, that with this very purpose, the value chain would encompass the upstream and downstream partners of this very entity, cumulatively comprising 75% of the sales/purchase ( by value) respectively. 
• It is acknowledged that the entities listed would report the KPIs with the BRSR core, for their value chain to the extent it is attributable to their business with that value chain partner. Such reporting may be segregated for upstream and downstream partners or can be reported on an aggregate basis.

Challenges Faced in ESG Reporting

The increasing demand for ESG reporting in India has brought numerous challenges that hinder the process and create a significant gap between the need for information and its availability. These obstacles are driven by various factors that emphasize the importance of meeting required standards and frameworks, even if it entails incurring additional costs to gather the necessary data. Unfortunately, these roadblocks can significantly impede the quality of the data, ultimately compromising the effectiveness of decision-making efforts.

However, amidst these challenges, there is a silver lining. Companies can overcome these hurdles by collaborating with experts and implementing well-balanced strategies for their overall performance. By doing so, they can ensure that their ESG reporting is comprehensive and accurate, enabling them to make informed decisions that align with sustainable practices.

Companies must recognize the significance of ESG reporting and its potential impact on their operations and reputation. By embracing this responsibility and investing in the necessary resources, companies can fulfil their obligations and contribute to a more sustainable and transparent business environment in India.

The difference between ESG reporting as well as the rating is as follows-

• ESG reporting focuses on utilizing first-party data within the framework of ESG. This involves measuring various metrics such as greenhouse gas emissions, human rights policies, and risk management practices. 
• The ESG rating system analyses reports and uses artificial intelligence to apply a scoring methodology. This allows for entities to be compared to each other in terms of their environmental, social, and governance practices. Additionally, the ESG rating agency can validate the entity's data by using data sources to arrive at a score. 

At Corpseed, we understand the significance of  ESG reporting as per the SEBI BRSR Guidelines in India and the immense impact it can have on the success of your business. Our team of highly skilled professionals is fully dedicated to helping you reach new heights of accomplishment and drive your business to even greater success. When you partner with us, you'll have access to the very best expertise and a cutting-edge system that will help you achieve your goals with confidence and optimism.