ESG and BRSR framework and Sustaibility

ESG Matrix –

ESG (Environmental, Social, Governance) is an extensive industry with a considerable number of reporting frameworks and enough terms and acronyms to fill a dictionary. With an almost overwhelming number of options available, it can be hard to know where to begin or how to plan your next steps.

ESG 3 Pillars –

A closer look at the three pillars
Its use of or dependence on fossil fuels.
Its use or management of water and other resources.
Pollution levels.

ESG KPI –
order to monitor the achievement of objectives, companies usually define uniform key performance indicators (KPIs) for ESG company-wide. These KPIs are consolidated regularly throughout the company and, as a rule, reported at least once a year to the central ESG management committee.

ESG Methodology –

ESG describes the Environmental (E), Social (S), and Governance (G) metrics that are evaluated to inform security selection. ESG analysis evaluates risks and opportunities beyond the scope of traditional financial analysis.

Our Impact Plan outlines how the entire global organization is coming together to support improvements across four pillars: Planet, People, Prosperity and Governance.

ESG links to cash flow in five important ways:

(1) facilitating top-line growth,

(2) reducing costs,

(3) minimizing regulatory and legal interventions,

(4) increasing employee productivity, and

(5) optimizing investment and capital expenditures.

BRSR –

Realizing the issue, the MCA adopted the National Guidelines for Responsible Business Conduct (NGRBC) in 2020. Subsequently, SEBI replaced BRR with Business Responsibility and Sustainability Reporting (BRSR), formulated by an MCA committee on BRR.

BRSR framework –

1.Measure
Capturing evidence-backed ESG data from your business units & the supply chain.

2.Manage
Track ESG performance based on customizable KPIs and materiality definition.

3.Report
Internal dashboards & external sustainability reports based on standard frameworks.

Good ESG posture means better brand trust and performance –

Value Proposition?

1.Standardise and automate ESG data collection workflows.

2.Data unification across facilities, departments and geographies.

3.Simplified internal tracking and reporting.

4.Reduce compliance response time with data accessibility.

5.Diagnostic and predictive alerts and monitoring to better your ESG posture.

6.Easier reporting on standard frameworks like BRSR, GRI, SASB, TCFD, UNSDG and more.

BRSR aims to set up link between the financial results of a business with its Environment, Social and Governance performance. SEBI has mandated that the BRSR will be applicable to the top 1,000 listed entities for reporting on a voluntary basis for F.Y. 2021–22 and on a mandatory basis from F.Y. 2022–23.

SEBI mandates top 100 listed companies by market capitalization to file Business Responsibility Reports (BRR) based on NVGs in 2012;

The Company has adopted the following nine key principles of the Business Responsibility envisaged in National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of business issued by the Ministry of Corporate Affairs and requirements of the Securities and Exchange Board of India .

The purpose of the BRSR is to bring about transparency between the company and its investors, stakeholders, regulators and public at large regarding the relevant non- financial sustainability information.

In any community in which economic activities are carried out in a specific environment, we find three interconnected forms of sustainability: environmental, economic and social.

Understanding the ESG management structure Where ESG resides within the company’s management can have a significant impact and should be a focus of the board. To exert sufficient influence, drive accountability, and ensure alignment with the business strategy, the lead should be a senior executive.

The term sustainability is broadly used to indicate programs, initiatives and actions aimed at the preservation of a particular resource. However, it actually refers to four distinct areas: human, social, economic and environmental – known as the four pillars of sustainability.

Sustainability Reporting In India Under SEBI’s BRSR Framework-

The Securities and Exchange Board of India (SEBI) recently introduced new requirements for sustainability reporting by the top-1000 listed Indian entities by market capitalization in a new format called the Business Responsibility and Sustainability Report (BRSR). The companies to which the new requirement applies need to disclose their material Environmental, Social, and Governance (ESG) risks and opportunities, their approach to mitigate the risks or adapt to them, and the financial implications involved in this process.

Reporting in the BRSR framework is designed to increase the transparency of corporate disclosures and help market participants examine sustainability-related risks and opportunities. Disclosures under the BRSR framework are meant to be more robust and cover a broader spectrum compared to other ESG reporting frameworks because BRSR requires robust information relating to social metrics, apart from data about employees, communities, and consumers.

For the fiscal year 2021-22, reporting under the BRSR framework was voluntary for the top-1000 listed companies in India by market capitalization. From the fiscal year 2022-23, compliance with BRSR requirements is mandatory for the top-1000 companies and voluntary for other listed companies, including those that have listed specified securities on the Small and Medium Enterprises (SME) exchange.

BRSR framework is based on 9 basic principles of the National Guidelines on Responsible Business Conduct (NGRBC) which pertain to businesses being ethical, transparent, and accountable, provisioning goods and services in a sustainable manner, ensuring the well-being of employees – including those in their value chains, being protective of the environment and mindful of sustainable production, responsive to all stakeholders, promoting human rights, complying with the regulatory framework, promoting inclusive growth and facilitating equitable development and consumer welfare. The BRSR framework collects information from businesses on each of these principles.

The information companies must disclose using the BRSR framework covers all aspects of ESG. It includes information on the risks and opportunities that arise from environmental and social factors, the leadership’s reading of such risks and opportunities, strategies to mitigate and adapt in accordance with those risks and opportunities, and the financial implications of these actions.

BRSR framework is divided into three sections. General disclosures, Management, and Process disclosure, and Principle-wise performance disclosures.

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Sustainability Reporting In India Under SEBI’s BRSR Framework

The Securities and Exchange Board of India (SEBI) recently introduced new requirements for sustainability reporting by the top-1000 listed Indian entities by market capitalization in a new format called the Business Responsibility and Sustainability Report (BRSR). The companies to which the new requirement applies need to disclose their material Environmental, Social, and Governance (ESG) risks and opportunities, their approach to mitigate the risks or adapt to them, and the financial implications involved in this process.

Reporting in the BRSR framework is designed to increase the transparency of corporate disclosures and help market participants examine sustainability-related risks and opportunities. Disclosures under the BRSR framework are meant to be more robust and cover a broader spectrum compared to other ESG reporting frameworks because BRSR requires robust information relating to social metrics, apart from data about employees, communities, and consumers.

For the fiscal year 2021-22, reporting under the BRSR framework was voluntary for the top-1000 listed companies in India by market capitalization. From the fiscal year 2022-23, compliance with BRSR requirements is mandatory for the top-1000 companies and voluntary for other listed companies, including those that have listed specified securities on the Small and Medium Enterprises (SME) exchange.

BRSR framework is based on 9 basic principles of the National Guidelines on Responsible Business Conduct (NGRBC) which pertain to businesses being ethical, transparent, and accountable, provisioning goods and services in a sustainable manner, ensuring the well-being of employees – including those in their value chains, being protective of the environment and mindful of sustainable production, responsive to all stakeholders, promoting human rights, complying with the regulatory framework, promoting inclusive growth and facilitating equitable development and consumer welfare. The BRSR framework collects information from businesses on each of these principles.

The information companies must disclose using the BRSR framework covers all aspects of ESG. It includes information on the risks and opportunities that arise from environmental and social factors, the leadership’s reading of such risks and opportunities, strategies to mitigate and adapt in accordance with those risks and opportunities, and the financial implications of these actions.

BRSR framework is divided into three sections. General disclosures, Management, and Process disclosure, and Principle-wise performance disclosures.

Table of Contents hide
General Disclosures
Management And Process disclosure
Principle-wise Performance Disclosures
General Disclosures
The general disclosures require companies to report data including general details of the organization, including…

Products and Services
Operational facilities
The markets it serves
Employees (Diversity; permanent or otherwise, etc)
Holding, subsidiary, and associate companies (including joint ventures)
Details of Corporate Social Responsibility (CSR) initiatives
Transparency and compliance issues
Overview of the entity’s material responsible business conduct issues*
*Overview of the entity’s material responsible business conduct issues includes identification of risks and opportunities from climate change and social matters, their rationale for identifying the risk or opportunity, approaches to adapt or mitigate those risks, and financial implications of the risk or opportunity.

Management And Process disclosure
These disclosures pertain to an organization’s structure, policies, and the processes in place to adopt NGRBC principles and core elements. It includes information related to governance, leadership, and oversight and incorporates a statement by the director responsible for the business responsibility report which highlights ESG-related risks, targets, and milestones.

Principle-wise Performance Disclosures
The BRSR framework collects information from businesses pertaining to the nine principles mentioned above. The principles govern how a business should conduct itself and how it should work with respect to environmental and social matters. The collected information is divided into two sections – essential indicators, which are mandatory, and leading indicators, which are voluntary.

Furthermore, the information needs to include an Environmental Impact Assessment (EIA) and Social Impact Assessment (SIA) of a company’s projects and/or products, the Scope 1 and 2 (direct and indirect) greenhouse gas emissions related to the projects and/or products, as well as resource allocation. Scope 3 emissions – those pertaining to the companies’ partners or suppliers – need to be reported on a voluntary basis.