Basics of Business Reporting Sustainability Reporting Explained

Over the past ten years, disclosure regulations have accelerated globally, holding businesses responsible for identifying their Environmental, Social, and Governance (ESG) responsibilities and transparently incorporating them into yearly disclosures.

Worldwide adoption of non-financial reporting has increased as more businesses become aware of the negative impacts their operations have on the environment and climate change. The focus on nonfinancial reporting has caused business models to shift in the direction of a more sustainable strategy. Standardised reporting formats for non-financial disclosures by firms have been developed by a number of organisations, including the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI), and the Task Force on Climate-related Financial Disclosures (TCFD).

In keeping with these international trends, the Securities and Exchange Board of India (SEBI) has instituted new sustainability reporting guidelines for listed businesses as part of its ongoing efforts to improve ESG standard disclosures.

In 2023, India has implemented the Business Responsibility and Sustainability Report (BRSR), which serves as a framework for reporting on environmental, social, and governance (ESG) issues. The voluntary guidelines that India’s Ministry of Corporate Affairs first released in 2009 and further improved in the Business Responsibility Report (BRR) of 2012 are the basis for these new reporting criteria.

The objective of the recently introduced Business Responsibility and Sustainability Report (BRSR) reporting format is to create connections between an organisation’s ESG performance and financial success. This can facilitate the process for investors, regulators, and other related stakeholders to get a fair assessment of the overall stability, growth, and sustainability of the business (which was previously dependent only on financial disclosures). According to a directive from SEBI, the top 1,000 listed companies (by market capitalisation) must disclose under the BRSR starting in FY2021–2022, voluntarily, and starting in FY2022–2023.

Advantages of BRSR

This reporting framework is primarily intended to be an internal tool for companies looking to align with the NGRBC. There are three sections to the reporting structure:

Section A: Overarching disclosures

This section’s goal is to gather basic data about the listed entity, such as its operations, personnel, holdings, subsidiaries, joint ventures, transparency and disclosure regulations and compliances, and goods and services offered.

Section B: Disclosures about management and processes

The business must provide information in this section about its policies and procedures that relate to the NGRBC principles of governance, leadership, and stakeholder engagement. Companies have been asked to provide links to their websites where these policies can be found, whenever applicable. This section’s information requirements mostly concern questions about management procedures, governance, leadership, and oversight.

Section C: Performance disclosures based on principles

Under this section, businesses must show by their deeds and results that they intend to engage in responsible business conduct. Accordingly, businesses must report on KPIs that are in line with the nine principles of responsible business conduct established by the NGRBC (National Guidelines on Responsible Business Conduct (NGRBC)

Additionally, businesses must report on the following two criteria for every principle:

Essential indicators (Required)

These are the indicators that the business is required by law to report. They include environmental data like energy, emissions, water, and waste; trainings given; company-led community projects; and social impact generated by the business.

Leadership indicators (Voluntary)

The company is not yet required to report these indicators. Nonetheless, there is a more general expectation that businesses will adhere to these metrics in order to enhance accountability and transparency. This could involve reporting on scope 3 emissions, breaking down energy use, and evaluating the partners in the value chain’s health and safety. The goal of the leadership indicators is to give a more comprehensive view of the business’s operations from a sustainable perspective.

The 9 principles defined by NGRBC are given below

  • Businesses should conduct and govern themselves with integrity and in a manner that is ethical, transparent, and accountable.
  • Businesses should provide goods and services in a manner that is sustainable and safe.
  • Businesses should respect and promote the well-being of all employees, including those in their value chains.
  • Businesses should respect the interests of and be responsive to all their stakeholders.
  • Businesses should respect and promote human rights
  • Businesses should respect and make efforts to protect and restore the environment
  • Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent
  • Businesses should promote inclusive growth and equitable development.
  • Businesses should engage with and provide value to their consumers in a responsible manner

The views and opinions published here belong to the author and do not necessarily reflect the views and opinions of the publisher.

Nadhiya Mali
Nadhiya Mali is a communications professional with a 13-year experience in PR, reputation management, CSR, and Sustainability. Currently she leads the Corporate Communications of one of India’s leading chains of laboratories.

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