The regulator SEBI agreed on Thursday to develop a new framework for corporate responsibility and sustainability reporting. From the fiscal year 2022-23, the top 1,000 listed companies will be expected to prepare such reports. The criterion would be applied to the top 1,000 companies based on market capitalization.
The change is expected to increase transparency and enable market participants to recognize and evaluate sustainability-related risks and opportunities.
The title of the report will be the Business Responsibility and Sustainability Report (BRSR). In a press release following the conclusion of its board meeting, SEBI said that it would replace the current Business Responsibility Report (BRR) submitted by companies.
The BRSR will be optional for the top 1,000 listed organizations in the fiscal year 2021-22 and mandatory starting in the fiscal year 2022-23.
According to SEBI, the BRSR will emphasize quantifiable metrics that allow for easy evaluation and comparison across businesses, industries, and periods.
Furthermore, under the new format, an entity’s disclosures on the environment and social (employees, clients, and communities) problems have been dramatically improved and made more granular.
The BRSR disclosures will be divided into critical (mandatory) and leadership (voluntary) metrics.
It also provides for reporting interoperability: organizations that prepare sustainability reports based on globally agreed to report structures can cross-reference the disclosures sought under the BRSR to the disclosures made under SEBI guidelines.
The new reporting standards are expected to increase transparency by publishing social, material, environmental, and governance details to allow market participants to recognize and evaluate sustainability-related risks and opportunities.