The Business Responsibility and Sustainability Report (BRSR) framework has emerged as a critical tool for businesses in India to align their operations with sustainability goals and demonstrate their commitment to environmental, social, and governance (ESG) standards. It is imperative for organisations to digitize their BRSR reporting processes to not just meet compliance requirements but actively drive sustainability within their business operations. Sustainable businesses perform better in building long-term trust with their investors, customers, employees and other stakeholders.
In this blog, we will explore:
- Regulatory Updates by SEBI
- SEBI’s Consultation Papers and Proposed Updates
- Summary of Key Metrics to be Reported in BRSR
- Steps Involved in Preparing Activity Data for Quantitative Metrics
- Need to drive 360 stakeholder engagement
- Ensuring Audit Readiness
- How sentra.world can help ace BRSR reporting?
- Conclusion
Regulatory Updates by SEBI
The Securities and Exchange Board of India (SEBI) has made significant strides to enhance corporate transparency and sustainability reporting with the introduction of BRSR, which replaced the previous Business Responsibility Report (BRR). Initially, the BRSR framework was applicable only to the top 100 listed companies by market capitalization. However, SEBI has progressively broadened its scope, and as of FY 2024-25, BRSR reporting is now mandatory for the top 1,000 listed companies, covering over 70% of the market capitalization.
SEBI’s Consultation Papers and Proposed Updates
In 2023, SEBI proposed several updates to strengthen ESG reporting. Key updates under consideration include:
- Disclosure of Carbon Emissions: SEBI is focusing on improving the accuracy and scope of carbon emissions disclosures in line with international standards like GRI.
- Expanded Scope: SEBI aims to extend BRSR to more companies, including those in the mid- and small-cap categories, focusing on value chain partners of top 1000 listed companies.
- Social and Governance Metrics: SEBI is proposing enhanced disclosures on social impact, workforce diversity, and governance structures, particularly focusing on the role of women in leadership positions.
While these updates are still in consultation, they signal a clear regulatory intent to deepen corporate sustainability engagement and reporting.
Summary of Key Metrics to be Reported in BRSR
The BRSR framework emphasizes several key metrics to evaluate corporate sustainability. The report covers three broad categories:
- Environmental Performance: This includes metrics related to carbon emissions, energy consumption, water usage, and waste management. Companies are required to provide data on their direct and indirect GHG Emissions, renewable energy usage, and steps taken to mitigate environmental impacts.
- Social Responsibility: BRSR calls for detailed reporting on social initiatives, workforce welfare, and community engagement. Metrics include gender diversity, health and safety measures, and employee engagement. Companies must also report on their policies towards human rights, fair labour practices, and inclusive growth.
- Governance Practices: This involves disclosures on corporate governance, board diversity, risk management practices, and anti-corruption measures. Companies are expected to provide details on board composition, leadership diversity, and executive compensation.
Additional mandatory disclosures under BRSR include tax transparency, supply chain sustainability, and the adoption of international ESG frameworks.
Steps Involved in Preparing Activity Data for Quantitative Metrics
Preparing activity data for quantitative metrics can be complex, but it is essential for companies to ensure accuracy, transparency and traceability in their BRSR submissions. Here are the key steps:
- Data Collection: The first step is to gather data from various departments. This includes energy usage reports, waste management logs, and HR records on employee diversity and training.
- Data Validation: Once data is collected, it should be validated for accuracy. Cross-checking with actual operational data, such as utility bills, employee records, and audit reports, is crucial. Data accuracy is vital for BRSR compliance.
- Metrics Calculation: Next, companies must calculate the key metrics as per the BRSR framework. For example, carbon emissions are often calculated based on energy consumption, factoring in the type of energy used. Likewise, employee diversity metrics require calculating the percentage of women, underrepresented groups, and marginalized communities in the workforce.
- Data Integration: Integrating data from different departments is necessary to get a comprehensive view of the organization’s ESG performance. This step ensures that the environmental, social, and governance factors are aligned and reported cohesively.
- Reporting: Once data has been validated and calculated, the final step is compiling it into the BRSR template. This involves filling in the various disclosure areas, ensuring all data is consistent, and addressing any gaps.
Need to Drive 360 Stakeholder Engagement
A major challenge of BRSR reporting is engaging a broad range of stakeholders — internal teams, external partners, and the supply chain — to ensure the accuracy and comprehensiveness of the report. Engaging these stakeholders is not only a regulatory requirement but also vital for ensuring the robustness of the sustainability efforts being reported. Here’s how companies can manage stakeholder engagement:
- Internal Teams: Engagement starts with internal stakeholders by involving key departments like operations, HR, procurement, and finance early in the reporting process. Teams handling environmental metrics (e.g., energy use, emissions) should work closely with social governance teams managing diversity and labor practices. Clear cross-department communication ensures consistency and accountability.
- Supply Chain Engagement:. Suppliers can be encouraged to adopt sustainability practices through clear sustainability criteria in procurement contracts and by establishing collaborative relationships focused on mutual ESG goals. Regular supplier audits and capacity-building initiatives are critical to improving supply chain transparency.
- Investors and Stakeholders: Businesses should also keep investors, regulators, and other stakeholders informed. This can include providing periodic updates and ensuring transparency in financial reports linked to ESG performance. The key here is to ensure that all reports are accurate, substantiated with real data, and available for scrutiny.
- Employee Involvement: Engaging employees in sustainability efforts is essential for long-term success. Companies can involve employees in training programs, sustainability projects, and internal surveys to foster a culture of responsibility. Engaged employees are more likely to contribute valuable data and insights, which can improve the accuracy of the BRSR reporting process.
Ensuring Audit Readiness
Audit readiness is an important aspect of BRSR reporting, as it ensures that the data presented is accurate, verifiable, and compliant with regulations. Here’s how companies can ensure their BRSR reports are audit-ready:
- Regular Internal Audits: Conducting internal audits on ESG data throughout the reporting cycle ensures that data is accurate, consistent, and aligns with BRSR guidelines. These audits should focus on validating the metrics reported and identifying any discrepancies early in the process.
- Third-Party Audits: In addition to internal audits, companies may also consider third-party audits for their BRSR reports. Independent auditors can provide an unbiased review of the company’s sustainability data and ensure compliance with regulatory standards.
- Data Integrity: Ensuring that data is traceable and substantiated with documentation is key for audit readiness. For example, carbon emissions data should be supported by utility bills, employee diversity metrics by HR reports, and waste management practices by waste disposal contracts.
- Clear Documentation: All processes related to data collection, validation, and reporting should be well-documented. Having a clear paper trail will streamline the auditing process and make it easier to demonstrate compliance with BRSR requirements.
How sentra.world can Help Ace BRSR Reporting?
sentra.world offers a robust ESG SaaS platform that ensures companies are ready for multi-stakeholder engagement and audit readiness, which is crucial for accurate and reliable BRSR reporting. Here’s how sentra.world can help:
- Comprehensive Stakeholder Management: The tool facilitates seamless collaboration among multiple stakeholders, from internal teams to suppliers. The platform enables real-time data sharing and engagement, ensuring that all relevant parties are involved in the reporting process.
- Audit-Ready Features: The platform is designed with audit-readiness in mind. sentra.world’s data validation and documentation features make it easy for companies to track, substantiate, and report their ESG metrics, ensuring compliance with BRSR and other global standards.
- Data Accuracy and Transparency: With real-time data collection and validation, sentra.world ensures that the reported ESG metrics are accurate, traceable, and substantiated with verifiable documentation, helping companies maintain audit readiness at all times.
- Supply Chain Integration: Sentra.world simplifies the process of collecting data from suppliers, making it easier for companies to engage their supply chains in ESG reporting. This ensures that supply chain practices are aligned with company-wide sustainability goals.
- Real-Time Insights and Reporting: The platform offers powerful tools for generating accurate, up-to-date reports that meet BRSR guidelines. Companies can track progress, identify gaps, and optimize their sustainability strategies.
Conclusion
The introduction of BRSR reporting marks a significant shift towards more transparent, accountable, and sustainable business practices in India. As regulations evolve, companies must stay ahead by adopting robust frameworks for ESG reporting that engage multiple stakeholders and ensure audit readiness.
For more information on BRSR Reporting, read another blog here.