DNV ESG Strategic Advisory and Assurance Services
Importance of Business Responsibility and Sustainability Reporting (BRSR) Mandate by Securities and Exchange Board of India in May 2021.
What are the ESG issues impacting long term performance of the organization?
SEBI, on 15th May, 2021 introduced new reporting requirements for sustainability by listed entities. This new Business Responsibility and Sustainability Report (BRSR) will replace the existing Business Responsibility Report (BRR). It will be applicable to the top 1,000 listed entities (by market cap), with voluntary implementation for FY22 (year ending March 2022) and mandatory implementation FY23 onwards.
This regulation paves the way for much improved ESG disclosures in terms of breadth as well as trends over past years. BRSR lays considerable emphasis on quantifiable metrics, which will enable easier comparability across sectors and time periods, as opposed to BRR. Further, the disclosures on climate /environment and social (employees, consumers and communities) related issues have been significantly enhanced in BRSR. The consulting paper on BRSR prepared by a committee constituted by the Ministry of Corporate Affairs gives some important hints on how the BRSR disclosure requirements would shape up. Based on that, we believe apart from basic disclosures, BRSR may include detailed disclosures on management policies and process, stakeholder engagement and a much detailed list of essential data points about employees, vendors, supply chain, diversity, ethics, etc.
ESG-related data has been biggest stumbling block for assessing ESG-related risks and opportunities in India. In our view, the new BRSR requirements should bring greater transparency through disclosure of material ESG-related data, which should enable market participants assess sustainability-related risks. With its implementation, it will be easier to assess medium-term trends in key ESG metrics,
The Challenges Investors are increasingly looking for ways to measure ESG performance consistently across the entire spectrum of companies. Companies, for their part, are finding ways to better manage the specific ESG risks and opportunities associated with their business, the impact of their operations on society and on the environment, and the reputational consequences they could face. Need of Board Oversight and formation of ESG committees at board level to translate strategies into action
Why BRSR is important now?
1. Promote transparent, standardized disclosures on ESG parameters and sustainability-related risks and opportunities among listed companies in India.
2. Help companies better demonstrate their sustainability objectives, position and performance to the market
3. Long-term value creation and increasing the ability of investors to make informed ESG-related decisions.
• True sustainability if impacts of actions are visible and measured
• Appropriate materiality indicators and measurements for quality reporting
• Involve all key stakeholders in materiality definition.
Compliance ready with New BRSR format:
• Adopt globally comparable metrics and disclosures.
• Adapt solutions for consistent and comparable measurements on sustainable value creation across global organisations
Lead with Integrated Reporting:
• Perform a fit-for-context materiality assessment.
• Act on what is true stakeholder materiality.
• Include relevant regional and global metrics and disclosures, reliable data and measurement mechanisms
• Track business impacts on relevant UN SDGs and build its traceability to national indicators and targets.
• Bring it all together in Integrated Reporting
How DNV Can help with ESG solutions?
1. Gap assessment of the group level ESG actions and their implementation at units
2. Materiality Assessment and Stakeholder due diligence
3. ESG Risk Assessment and Integration with Enterprise Risk Management
4. Capacity building Sessions for corporates for material ESG performance
5. Verification of the ESG data, methodologies at sites, tools
6. Monthly, quarterly, Annual disclosure verification and impact assessment
7. Stakeholder’s communication