In view of the increased focus of the investors on businesses being sustainable and responsible towards the society, SEBI has, vide its circular dated May 10, 2021, specified new reporting requirements on Environment, Social and Governance (“ESG”) parameters by listed entities.
SEBI vide Circular dated November 04, 2015 had prescribed the format for the Business Responsibility Report (“BRR”) in respect of reporting on ESG parameters by listed entities. SEBI has now introduced new reporting requirements on ESG parameters called the Business Responsibility and Sustainability Report (“BRSR”) in terms of an amendment to regulation 34(2)(f) of LODR Regulations vide Gazette notification no. SEBI/LAD-NRO/GN/2021/22 dated May 05, 2021 (“Amendment”). The BRSR is accompanied with a guidance note to enable companies to interpret the scope of disclosures. In terms of the aforesaid Amendment, with effect from the financial year 2022-2023, filing of BRSR shall be mandatory for the top 1,000 listed companies (by market capitalization) and shall replace the existing BRR. Filing of BRSR is voluntary for the financial year 2021-22.
The BRSR seeks disclosures from listed entities on their performance against the nine principles of the ‘National Guidelines on Responsible Business Conduct’ and reporting under each principle is divided into essential and leadership indicators. The essential indicators are required to be reported on a mandatory basis while the reporting of leadership indicators is on a voluntary basis.
The BRSR is intended towards having quantitative and standardized disclosures on ESG parameters to enable comparability across companies, sectors and time.
Such disclosures are also expected to help investors make better investment decisions. The BRSR shall also enable companies to engage more meaningfully with their stakeholders, by encouraging them to look beyond financials and towards social and environmental impacts.
Please find a copy of the SEBI Circular dated May 10, 2021, here.
This update has been contributed by Suchita Ambadipudi (Partner) and Smriti Tripathi (Associate).
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