Dr. Sairam Bhat, Professor of Law, NLSIU

Mr. Rohith Kamath, Advocate, Rex Law Chambers

In recent times, the investors and stakeholders have become concerned with how a company is having an impact on the environment and society. They have felt that a society in particular and the public at large are a part of stakeholders’ value chain. The stakeholders now track both the financial as well as non-financial disclosure of a company as it makes them aware of a company’s impact on the society and helps them in making informed decisions.

Sustainability Reporting can be defined as an overview of a company’s social, economic and environmental impacts which are caused on a regular basis by the companies through their activities and operations. Sustainability Reporting has come into existence on the demand of the stakeholders as they require business accountability for the environmental and social impacts and it also enables the businesses to be transparent about the risks and opportunities they come across. The increase for sustainability reporting can be attributed to three factors-

  • The pressure received from the stakeholders on the companies to disclose certain information, especially regarding the negative impact a company is having on the environment
  • Government regulations on the disclosure requirements to protect the interests of the citizens and environment
  • The market demand which has required the companies and MNCs who have committed themselves globally, to demonstrate their sustainability

Securities and Exchange Board of India (SEBI) introduced new requirements for sustainability reporting by listed entities, replacing Business Responsibility Report (BRR) to Business Responsibility and Sustainability Reporting (BRSR). In December 2019, SEBI came out with a notification and extended the BRSR requirement to top 1000 listed entities by market capitalization from top 100 listed entities.

Derived from an Environmental, Social and Governance (ESG) perspective, Business Responsibility and Sustainable Report (BRSR) is introduced to reflect the intent and scope of reporting on the non-financial matters. It is intended to enable businesses to engage more deeply and meaningfully with their stakeholders. Being a non-financial reporting, its aim is to encourage the businesses to engage themselves and go beyond the financial compliance and focus on social and environmental impacts, especially those having negative impacts. BRSR is an initiative which will give investors the access to the disclosures on ESG parameters.

The existing format of BRR was based on NVGs, short for ‘National Voluntary Guidelines on Social, Economic and Environmental Responsibilities of Business’, issued by the Ministry of Corporate Affairs, Government of India. In 2019, in consideration of the growing global developments and domestic changes, these NVGs were revised and were released as the ‘National Guidelines on Responsible business conduct’ (NGRBC). The committee has suggested two formats of disclosure: a ‘comprehensive format’ and the ‘Lite version’.

There are 9 principles of NGRBC based on which the BRSR is to made which will further enable the businesses to measure the performance of the business in the area of responsibility and sustainability. These principles are divided into essential and leadership indicators and the listed entities are required to report on both the indicators mandatorily. These principles are-

  1. It is expected of businesses to conduct themselves in a manner which is accountable, transparent and ethical
  2. The Businesses should provide goods and services that are sustainable and safe for the consumers
  • The businesses should respect and promote the well-being of their employees
  1. It is obligatory for the businesses to respect their stakeholders and be responsive to them
  2. Businesses should respect and promote human rights
  3. One of businesses aim should be to make efforts to protect and restore the environment
  • When engaging with the public, the businesses should maintain transparency and a sense of responsibility
  • Businesses should promote inclusive growth and equitable development
  1. Businesses should engage with their customers and provide value to them

In pursuant to the meeting held by SEBI in the month of March 2021, SEBI has come out with new disclosure requirements which is expected to bring greater transparency and will enable the market participants to assess and measure the risks and opportunities related to sustainability. The new disclosure requirements sought by SEBI are-

  • Under BRSR, the listed entities are required to provide with an overview of the entity’s ESG, short for Environmental, social and governance risks and opportunities. The entities are also required to mitigate the risks or adapt them along with highlighting the financial implications of the same.
  • The listed entities need to mention in the report the sustainability-related goals and targets and also the performance against the same.
  • The report should cover environment related disclosures such as air pollutant emissions,

Resource usages (energy & water), greenhouse emissions, transitioning to circular economy, waste generation and waste management practices, bio-diversity, etc.

  • The Report should also include social related disclosures which includes the workforce, value-chain, communities and consumers. Certain disclosures should be on-
  • Employees/workers: This shall include measures taken for differently abled workforce and social and gender diversity including turnover rates, median wages, welfare benefits to permanent and contractual employees, occupational health and safety, etc.
  • Communities: At community level, the listed entities will be required to make disclosures on Social Impact Assessments (SIA), which is the process of identifying and managing the social impacts of the projects that are undertaken by an industry, Rehabilitation and Resettlement, Corporate Social Responsibility (CSR) and others.
  • Consumers: In the case of consumers, disclosures are needed to be made on product labelling, product recall, consumer complaints with regard to data privacy, cyber security, etc.


The BRSR has three sections and the purpose of these three sections is listed below-

  1. General Disclosures: The objective of this section is to provide basic details related to the company like the location, capital requirement, size, number of employees, etc.
  2. Management and process: Under this section, the company is required to disclose information on the policies and processes of NGBRC principles to ensure that the company has building blocks in place to further ensure responsible conduct of the company
  • Principle-wise performance: This section reflects how a company is performing in respect of each principle of NGBRC in order to ensure responsible business conduct.


The provision regarding new disclosure requirements will be on voluntary basis for the financial year 2021-22 and mandatory from 2022-23 onwards. This has been done in order to give certain time to the listed entities to adapt to the new requirements introduced by SEBI. Since SEBI is the first one among its global peers to adopt the sustainability reporting for the listed entities, the entities are expected to adopt it quickly in order to be at forefront of the sustainability reporting.


The SEBI regulation also pointed out that with the adoption of the Paris agreement on climate change and UN sustainable Development Goals, the need for mitigating climate change impact has emerged as one of the major issues globally and has become a goal among many nations. The investors and stakeholders seem more interested in those businesses which seek to be responsible and sustainable towards the environment and economy. This is one of the reasons why the companies have started to put equal amount of emphasis on the sustainability-related factors and the financial compliance. The three pillars- value chain, labor welfare and women’s participation in the economic sector have been embedded in the BRSR format. In addition, the sustainable production, with more focus on procurement of raw material, waste management and recycling are some of the challenges that have been incorporated in BRSR.


BRSR as an initiative will benefit the investors and companies in many ways-

  • It will ensure that the investors have access to standardized information for ESG parameters
  • This access of relevant information will help the investors to identify and assess the sustainability-related risks and opportunities which will further help them in making good investment decisions
  • The BRSR makes emphasis on quantifiable metrics which allows for easy measurement and comparability across sectors and time periods
  • This initiative will provide the companies with long term value creation as the companies will be able to portray their sustainability objectives, position and performance in a uniform manner
  • The high standards of ESG disclosures and transparency will also help the investors in attracting more capital and investment
  • It also enables the companies to engage with their stakeholders more deeply and meaningfully and makes them look beyond the financial area and put significance on the social and environmental impacts
  • BRSR also provides for inter-operability of reporting i.e. the listed entities who have been preparing sustainability reports based on accepted and valid international framework can cross-reference their standards of disclosure with the standards sought by SEBI
  • As a long-term measure, it is envisioned that the information required through BRSR will be useful in building Business Responsibility-Sustainability Index for the companies. This will help the government in placing those businesses above for procurement that demonstrate a responsible business conduct

There was a time when it was difficult to collate the company-related information at one place for the purpose of research and evaluation. But now, due to SEBI’s unrelenting agenda of escalating the disclosure and reporting requirements across different sectors, it has become easy for all the information to be available at any time and at any place. As the ESG investing becomes more mainstream, the BRSR is a significant initiative to keep pace with the disclosure requirements.

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