BRSR: Enabling Industry to Contribute to the Sustainability Agenda

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Mr R Mukundan

Vice President, CII
MD and CEO, Tata Chemicals Ltd

Understanding and aligning with dynamic global regulations and compliance is essential for any organisation to remain competitive and ensure long-term sustainability. At the same time, stakeholders are increasingly pressing organisations to adopt sustainable and inclusive business practices. ESG reporting frameworks have become critical for the Industry's sustainability and resilience strategies, which must meet stakeholder expectations and contribute to global value chains.

SEBI has set a new benchmark for the Indian Industry by requiring the listed entities to disclose their ESG performance, including information on their value chains, through the sustainability reporting frameworks Business Responsibility and Sustainability Reporting (BRSR) and BRSR Core.

Indian Industry welcomes the BRSR reporting framework. While ensuring enhanced transparency in sustainability reporting, BRSR has also enabled organisations to understand their responsibility towards the environment and society. It has served as a vital bridge, enabling Indian organisations to meet global stakeholder expectations. According to a SEBI circular, more than 100 companies voluntarily reported on BRSR the year before its mandate.

CII plays a pivotal role in supporting businesses through this transition by engaging with SEBI on various aspects of reporting for BRSR and BRSR Core through research, Industry-wide surveys and stakeholder deliberations. CII also ensures timely representation of issues to SEBI to expedite the adoption of the reporting frameworks and make them more practical and accessible to adopt. Some critical Industry responses have been given below:

  • Assurance on BRSR Core is challenging, as ‘assurance’ is audit centric. Substituting the term ‘assurance’ with ‘assessment’ will entail defining it, setting broad contours on it and creating an SOP on which assessment can be done.
  • Only some BRSR Core KPIs are relevant to some sectors. Thus, the introduction of sector-specific KPIs is recommended.
  • Gathering BRSR Core data from 75 per cent of value chain partners before annual reports are complex; hence, a gap should be provided.
  • Value chain ESG disclosures, which are currently required on a comply-or-explain basis, may be challenging in the first year, especially for MSME supply chains. Therefore, they could be changed to a voluntary approach.

These were shared with the SEBI and the regulatory body is engaging with the Industry through consultations and feedback to resolve these. By bringing stakeholders’ perspectives into these deliberations, CII ensures that the evolving BRSR and BRSR Core frameworks address the unique challenges different sectors face.

However, for the Indian Industry, which has a presence in other countries, global ESG reporting continues to be challenging. For the Industry to be competitive globally, it is essential to ensure that standards, KPIs, thresholds and ratings consider the Global South’s applicability, relevance and prioritisation. A few pertinent issues have been highlighted below.

Absence of Global South Perspective

Organisations in the Global South choose to align their resources towards social development, including eliminating hunger and poverty, access to clean water and sanitation and social upliftment. Most of this work is classified under CSR. Global ESG frameworks need more relevant KPIs or misaligned weight to integrate these factors.

Global ESG regulations should advocate for a more inclusive approach in the standard-updating process involving representatives from the Global South, including India. This is a pertinent concern as developing nations in the Global South continue to grapple with obstacles such as limited access to capital, energy, policy constraints and inadequate infrastructure, hampering their progress towards sustainability. Integrating Global South concerns in global ESG regulations will ensure these regions' unique economic, social and environmental contexts are considered.

Multiplicity of Globally Accepted ESG Standards

Globally acceptable standards can accelerate the implementation of a sustainable economy. They can also form the basis for reporting for overseas subsidiaries and devise investment strategies in the ESG capital market.

Need for Differentiated Rating Parameters

Since every organisation is unique, ESG frameworks should not be prescriptive. Instead, they should offer flexibility around what material is needed for each organisation. This approach allows organisations to report on essential disclosures to their stakeholders without the burden of adhering to multiple frameworks.

At the same time, the global disclosure and rating parameters need to be recalibrated to a country's economic maturity and a company's size through their distribution into mandatory and voluntary topics.

Absence of KPIs Related to Informal Workforce / Gig Economy

Nearly 70 per cent of workers globally are in informal employment. Most of India's workforce belongs to digital and e-commerce organisations and comprises contractual gig workers and vendors. Standards, KPIs, thresholds and ratings must consider the informal workforce’s applicability, relevance and prioritisation in developed and developing countries.

These frameworks can help support the vision of sustainable business and play an essential role in creating a level playing field in global trade. They can also help ease and simplify global compliance and simultaneously reduce multiple reporting, facilitating a more significant adoption of the three critical pillars.

Resolving these challenges can facilitate the Industry’s transition towards greater transparency and meaningful contribution to the sustainability agenda.

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This article was first published in the CII Policy Watch - Focus: ESG (December 2024)

Published on 13 January 2025
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