What is a BRSR Report in Business?

Every business creates an ecosystem. However, its success depends on how consistent and reliable the parts of the ecosystem are. Over the decades, governing bodies have requested and asked for transparency from businesses about their practices. Financial disclosures have been an annual task for companies. Beyond ethical practices of financial dealings and paying taxes, businesses are expected to contribute back to their ecosystem in various ways.

A business's interaction with the environment, society, overall adherence to corporate governance, and workforce is part of a comprehensive document called the Business Responsibility and Sustainability Reporting (BRSR).

The United Nations Sustainable Development Goals (UN-SDGs) introduced an effort to create more transparency in business dealings. Based on this global move towards responsible business conduct, the Ministry of Corporate Affairs (MCA) released the National Voluntary Guidelines (NVG) in 2011 to request businesses disclose their Social, Environmental, and economic responsibilities.

Encouraged by the NVG, the Security and Exchange Board of India (SEBI) introduced the first regulatory disclosure reporting format, the Business Responsibility Report (BRR), in 2012.

The BRR asked for information related to the Environment, Social, and Governance (ESG) practices of the top 100 listed companies in 2012 and was made mandatory for the top 1000 listed companies by 2019.

In 2021, the Business Responsibility and Sustainability Report (BRSR) replaced the BRR for the top 1000 listed companies.

The key differences between BRR and BRSR reports are:

Although the BRSR report is tedious to complete, businesses can understand the efficiency of their practices and processes. Companies can also get insights into which sustainable and responsible practices can be included in their processes.

Organizations can also gain pointers and creative ideas to improve their existing processes, increase efficiency, and reduce costs. The transparency created by these disclosures can increase the confidence and credibility of the company’s investors, stakeholders, customers, employees, and vendors.

It also builds brand credibility and goodwill.

Aligning with ESG Principles & Demonstrating Sustainability Efforts

Aligning with ESG principles and promoting sustainability tugs at the human side of businesses beyond finances and consumerism. Being in sync with ESG principles indicates the company’s commitment to the well-being of its ecosystem. All ESG practices are within the purview of the business.

The company can contribute to:

• conserving the environment by managing waste disposal, reducing emissions, and water or energy conservation

• promoting employee diversity, equal opportunities, health and safety, human rights, and adhering to labour laws

• maintaining stakeholder’s best interests, legal practices, and business ethics

Sustainability practices include biodiversity, supply chain, community development, and corporate social responsibility. These practices, although voluntary, are beneficial and build the business’ brand credibility.

Attracting Socially Responsible Investors & Partners

Responsible and sustainable businesses have distinct processes and practices ingrained in their everyday functioning. Their initiatives and projects are often the differentiators from other businesses.

Expectations and demands from investors and partners also differ to align with their practices. Thus, the business attracts investors and partners who follow similar practices and believe in long-term efficiency, natural conservation, and global well-being.

Enhancing Brand Reputation & Consumer Trust

Today’s consumers are highly aware and concerned about how a product lands in their hands. They also observe whether a business lives up to its claims regarding values and ethics. When businesses disclose their responsible and sustainable practices, consumers get a first-hand perspective of the business.

This helps the business build its brand reputation, which builds consumer trust. These practices also help companies earn the trust of Gen Z, who often choose employers with a ‘purpose’.

Building a Sustainable Business Future

With the changing global financial landscape, climate change, and other social challenges, every business needs to be future-ready to sustain itself and contribute to ESG factors. Incorporating efficient, sustainable practices and adapting to future changes becomes easy for businesses.

By associating with like-minded investors, partners, and stakeholders, sustainability has a ripple effect across the community.

Fulfilling Regulatory Requirements & Avoiding Penalties

Since 2021, the BRSR report has been a mandatory disclosure document for the top 1000 listed companies as per market capital. The BRSR report has 98 mandatory, essential questions that the business must disclose.

This includes general information about products and services, employees, turnover, core KPIs, CSR, etc. It also requires the business to disclose its risk management protocols, anti-corruption, and compliance with regulatory standards.

If a business fails to submit the BRSR report annually (for a financial year), SEBI marks the business as non-compliant in the equity listing and may impose other penalties.

Staying Compliant with SEBI Mandates

Considering the dynamic business ecosystem, SEBI has introduced changes to the BRSR reporting framework. These revisions or amendments are communicated to the concerned businesses and published on the SEBI website.

Several companies have a dedicated team or assurance providers/agencies to document and submit the BRSR report on time.