In India’s Nationally Determined Contribution (NDC)—its action plan for emissions reduction and climate adaptation in support of the Paris Agreement—the country pledged to reduce the emissions intensity of its gross domestic product by 45% by 2030. India also plans to achieve half of its cumulative installed electricity production capacity from energy resources that are not based on fossil fuels by 2030. In fact, the 35% year-over-year increase in solar capacity achieved in 2022 demonstrates the country’s efforts to move toward green energy. Another element of India’s NDC is its plan to add enough forest and tree cover to provide an additional carbon sink (a natural environment that absorbs carbon from the atmosphere) of 2.5 to 3 billion tons of carbon dioxide equivalent (CO2E).    

India’s efforts to scale back its carbon footprint extend to regulatory activity, which includes a reporting requirement for large, publicly listed companies. The Business Responsibility and Sustainability Report (BRSR) is required for India’s top 1,000 listed companies, and it’s mandatory for FY2022-23, which ended on March 31, 2023.  

The Evolution of ESG Reporting in India

The precursor to the BRSR was the Business Responsibility Report (BRR), which was built on business responsibility and sustainability indicators from the National Voluntary Guidelines (NVGs) on corporate social responsibility. The NVGs were issued in 2009 by the Ministry of Corporate Affairs. In 2012, the Securities and Exchange Board of India (SEBI) mandated that the top 100 listed companies by market capitalization file the BRR along with their annual reports; in 2015, the requirement was extended to an additional 400 listed companies. In 2019, the National Voluntary Guidelines were revised and reissued as the National Guidelines on Responsible Business Conduct 

In a May 2021 circular, SEBI announced that its Business Responsibility Report would be replaced with the Business Responsibility and Sustainability Report, which would be required from India’s top 1,000 listed companies. These companies are expected to supply information in the BRSR about any environmental, social and governance (ESG) initiatives undertaken, along with information on their performance against nine principles that were included in the national guidelines. 

The Format of the BRSR

The BRSR includes three reporting sections, which cover general disclosures, management and process disclosures and principle-related performance disclosures. The nine principles come into play in the last section, where companies must explain how they have incorporated the principles into key processes and decisions.  

The nine principles, which can be found in the Business Responsibility and Sustainability Reporting Format, state that businesses should:   

  1. Conduct and govern themselves with integrity and in a manner that is ethical, transparent and accountable.  
  2. Provide goods and services in a manner that is sustainable and safe. 
  3. Respect and promote the well-being of all employees, including those in their value chains.  
  4. Respect the interests of stakeholders and be responsive to them.  
  5. Respect and promote human rights.  
  6. Respect and make efforts to protect and restore the environment.  
  7. Engage—if they so choose—in influencing public and regulatory policy in a manner that is responsible and transparent.
  8. Promote inclusive growth and equitable development.  
  9. Engage with and provide value to their consumers in a responsible manner.  

Beneath each of the nine principles are essential indicators and leadership indicators. All reporting companies are expected to disclose the essential indicators, while the reporting of leadership indicators is voluntary, providing companies the opportunity to demonstrate an aspiration “to progress to a higher level in their quest to be socially, environmentally and ethically responsible.”  

What Must Companies Report in Their BRSR?

Among the indicators that listed companies must report are:  

  • The participation / inclusion / representation of women among its employees. 
  • R&D and capital expenditure investments in specific technologies to improve the environmental and social impacts of products and processes, as a percentage of total R&D and capex investments.  
  • Total electricity and fuel consumption. 
  • Total volume of water withdrawal, including surface water, groundwater, third-party water and seawater / desalinated water.  
  • Scope 1 and Scope 2 emissions.  
  • Total waste generated, including plastic waste, bio-medical waste and construction and demolition waste.  

These are just a few examples of the indicators covered in the BRSR. Note that while Scope 3 disclosures are included, they are listed as leadership indicators, making them voluntary disclosures. This differentiates the BRSR from the EU Corporate Sustainability Reporting Directive (CSRD) and the International Sustainability Standards Board’s (ISSB) IFRS sustainability-related disclosure standards, which include Scope 3 disclosures.  

Those companies that are already using disclosure frameworks such as the Task Force on Climate-Related Financial Disclosures (TCFD)Sustainable Development Goals (SDGs)Global Reporting Initiative (GRI) or CDP are still required to submit a BRSR, however, they can cross-reference documents prepared for these frameworks in their BRSR reports. The BRSR incorporates key performance indicators from several international frameworks in order to align it with global ESG reporting trends. 

ESG Disclosures on the Rise

While the disclosures mandated by the BRSR were voluntary prior to FY2022-23, companies were already starting to report in larger numbers. India’s Deccan Herald cites findings from ratings firm CareEdge Research, which reported a 160% increase in the voluntary disclosure of ESG data between FY2020 and FY2022. The numbers will certainly increase further with the BRSR requirement in force. The question is whether the transparency achieved through the BRSR will lead to a reduced impact on climate change and the environment.     

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