In recent years, sustainability reporting in India has undergone significant transformations. The landscape of Environmental, Social, and Governance (ESG) reporting has shifted from voluntary initiatives to mandatory regulations. Today, stakeholders including consumers, investors, and regulators demand more transparency from businesses. The rise of ESG reporting standards globally, coupled with evolving expectations, has pushed India towards a more robust framework for sustainability disclosures. A pivotal moment in this journey was the introduction of the Business Responsibility and Sustainability Reporting (BRSR) framework by the Securities and Exchange Board of India (SEBI) in May 2021. This article explores BRSR in detail, delving into its structure, significance, and the role of ESG software in facilitating compliance.

What is SEBI's BRSR?

The BRSR framework is an advanced, hybrid ESG reporting standard designed to integrate the best practices from globally recognized frameworks, including the United Nations Sustainable Development Goals (17 SDGs), the Global Reporting Initiative (GRI), and the National Guidelines on Responsible Business Conduct (NGRBC). BRSR (Business Responsibility and Sustainability Reporting), highlights its core purpose: to serve as a single source of sustainability information in India. It is particularly useful for investors, enabling them to compare the sustainability performances of various companies and assess the associated risks and opportunities.

BRSR Reporting: A Three-Section Breakdown

BRSR reporting is structured into three main sections, each targeting different aspects of a company’s sustainability performance.

1. General Disclosure

‍This section requires companies to disclose essential internal information. This includes details such as the company’s name, Corporate Identity Number (CIN), registered office and manufacturing unit locations, revenue, and turnover. Additionally, companies must report on the gender ratio of employees and workers, the proportion of women in senior management, and the employee turnover ratio. These disclosures provide a baseline understanding of a company's demographic and operational structure.

2. Management & Process Disclosure‍

In this section, companies must outline their approach to the NGRBC principles. The NGRBC framework is built on nine principles, which cover various aspects of ethical business practices, sustainability, and stakeholder engagement. These principles include ensuring that businesses operate with integrity, provide safe and sustainable goods and services, respect human rights, and promote environmental protection. Companies must also disclose their policies and processes related to these principles, highlighting their commitment to responsible business conduct.

3. Principle-Wise Performance Disclosure

‍This section is further divided into two categories: essential indicators and leadership indicators.

• Essential Indicators: These are mandatory Key Performance Indicators (KPIs) that companies must report on. They include data on training programs, social impact, and environmental metrics such as energy consumption, waste management, water usage, and greenhouse gas emissions (GHG). The data reported under essential indicators provide a snapshot of the company’s sustainability performance.
• Leadership Indicators: This category involves voluntary disclosures that demonstrate a company's commitment to sustainability beyond the mandatory requirements. KPIs under this section include life cycle assessments (LCA), biodiversity initiatives, scope 3 emissions (indirect emissions), supply chain disclosures, and conflict management policies. Companies that report on leadership indicators often gain recognition for their proactive approach to ESG management.

The Role of ESG Software in BRSR Reporting

The complexity of BRSR reporting necessitates the use of advanced ESG software solutions. These tools simplify the data collection, management, and reporting processes, ensuring that companies can meet the stringent requirements of BRSR without excessive administrative burden. Below are some of the key features that the best ESG software should offer:

• Hassle-Free Data Collection: Effective ESG software should integrate seamlessly with existing Enterprise Resource Planning (ERP), Human Resource Management Systems (HRMS), Customer Relationship Management (CRM), or Management Information Systems (MIS). This integration allows for automatic data extraction, reducing manual input and minimising errors.
• Collaboration Across Departments: Sustainability data is typically dispersed across various departments, from production to human resources. ESG software should facilitate collaboration by allowing authorised personnel to input and access data securely. This ensures that all relevant KPIs are accurately captured while maintaining data privacy.
• Third-Party Validation: To maintain credibility, the data entered into ESG software should be verified by third-party auditors. This validation process ensures that the data is accurate and reliable, providing stakeholders with confidence in the reported information.
• Flexibility for Different Business Models: ESG software must be adaptable to different business types, whether product-based or service-oriented. For instance, a manufacturing company might prioritise reporting on greenhouse gas emissions and material waste, while an IT company might focus on electricity usage and data privacy.
• Data Visualization: Raw data, often presented as numbers or yes/no responses, needs to be converted into graphs and summary reports. These visualisations not only help in communicating sustainability progress to stakeholders but also allow companies to track their year-on-year performance against environmental, social, and governance targets.

The Future of ESG Reporting in India

As sustainability becomes a core component of corporate strategy, the demand for standardised ESG reporting in India will only grow. BRSR is poised to become the foundation for all sustainability reporting, influencing how companies operate and how stakeholders assess corporate responsibility. With tools like Prism—an advanced sustainability reporting software by Oren—companies can automate their BRSR reporting, ensuring compliance and enhancing their ESG performance.

In conclusion, BRSR is a significant step towards making sustainability reporting in India more transparent and standardised. By integrating best practices from global frameworks and emphasising both mandatory and voluntary disclosures, BRSR sets a new benchmark for ESG reporting. As companies adapt to these new requirements, the use of cutting-edge ESG software will be crucial in meeting the demands of stakeholders and contributing to a more sustainable future.