Comprehensive Guide to Filing Business Responsibility and Sustainability Report (BRSR)

Introduction

The National Stock Exchange of India Ltd. (NSE) issued a detailed circular (Ref. No: NSE/CML/2024/11) on May 10, 2024, directed to Company Secretaries of listed companies. The circular pertains to the Business Responsibility and Sustainability Report (BRSR) requirements as per Regulation 34 (2) (f) of the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015. The circular includes FAQs, general observations, and guidelines to assist companies in the accurate and uniform submission of BRSR. This article provides an in-depth interpretation of the circular, aiming to elucidate its requirements and ensure compliance by listed entities.

Mandatory Submission of BRSR

Applicability

The BRSR is mandatory for the top one thousand listed entities based on market capitalization. This requirement is outlined in SEBI's Circular SEBI/HO/CFD/CMD-2/P/CIR/2021/562 dated May 10, 2021. The circular specifies that companies falling under this category as of March 31, 2024, must submit their BRSR for the financial year 2023-24. The market capitalization list can be accessed via the NSE website.

Continuity of Compliance

If a company was within the top one thousand listed entities based on market capitalization as of March 31, 2023, and March 31, 2022, but not as of March 31, 2024, it is still required to comply with BRSR submission. According to Regulation 3(2) of the SEBI LODR, 2015, regulations applicable to companies based on market capitalization criteria continue to apply even if they fall below the threshold.

Voluntary Submission

Listed companies outside the top one thousand based on market capitalization, including those on the SME Exchange, may voluntarily submit BRSR. This promotes transparency and can enhance their sustainability credentials.

Dual Exchange Compliance

If a company is listed in the top one thousand on either NSE or BSE but not both, it must file the BRSR with both exchanges. This ensures comprehensive compliance across all trading platforms.

Reasonable Assurance for Top 150 Companies

The top 150 listed companies based on market capitalization as of March 31, 2024, must obtain reasonable assurance on their BRSR Core. This includes providing details of the assurance provider and the type of assurance (reasonable or limited). A copy of the assurance certificate must be attached with the BRSR when submitted in PDF format and in the annual report.

BRSR Submission Process

Utility Compatibility

The BRSR XBRL utility available on the BSE portal can also be used for submissions on the NSE NEAPS portal and vice versa. This compatibility simplifies the submission process for companies.

Submission Format

BRSR must be submitted to the exchange in both PDF and XBRL formats. The path for submission on the NEAPS portal is: NEAPS > Common XBRL Upload > Business Responsibility & Sustainability Report. Both formats should be submitted on the same day as the annual report.

Revision Options

Companies have the option to revise their BRSR submissions on the exchange. However, this should be a last resort and done sparingly. A covering letter explaining the changes must accompany revised filings.

Handling Non-Applicable Data

If certain BRSR disclosures are not applicable to a company's industry, it should explicitly state the non-applicability and provide reasons. This should be noted in both the BRSR PDF and XBRL under the "Add Notes" section.

Guidance Material

The NSE has published 38 sector-specific integrated guides to the BRSR format to aid companies in understanding the updated disclosure requirements. These guides provide detailed explanations of each parameter and the objective behind them, ensuring accurate and comprehensive reporting.

General Observations and Guidelines

The circular includes several observations and guidelines based on BRSR submissions for FY 2022-23. These aim to improve the quality and consistency of disclosures. Key observations include:

General, Management, and Process Disclosure

Policy Formulation: Companies must provide Yes/No responses to questions on policy formulation across nine principles. Many companies failed to map answers correctly or link specific documents.
Turnover Rate: Companies must provide turnover rates for permanent employees and workers, not an overall turnover rate.
Differently Abled Employees: Details on differently abled employees and workers must be disclosed.
Product and Service Bifurcation: Companies must bifurcate products and services sold, accounting for 90% of turnover, and provide NIC codes without exceeding 100%.

Specific Principles

Principle 2: Sustainable Sourcing and Product Lifecycle

Percentage Disclosure: Companies should disclose percentages for R&D and capital expenditure investments.
Sustainable Sourcing: Details on sustainable sourcing procedures and the percentage of inputs sourced sustainably should be uniform.
Product Reclamation: Companies must disclose processes for reclaiming products for reuse, recycling, or disposal, or provide reasons for non-applicability.

Principle 3: Employee Well-being

Uniformity in Data: Discrepancies between well-being measures and employee data must be addressed.
Maternity and Paternity Benefits: Benefits should be disclosed as a percentage of female employees/workers only.
Skill Upgradation: Data on skill upgradation should include both permanent and non-permanent employees.

Principle 6: Environmental Sustainability

Energy Consumption and GHG Emissions: Data should be disclosed in joules or multiples. Companies must use uniform measurement units and provide accurate data.
Renewable Energy: Companies should provide detailed disclosures on renewable energy initiatives and data.
Waste Management: Disclosures should be in metric tonnes and detailed across specific waste categories.

Principle 9: Customer Data Protection

Data Breach Disclosures: Companies must provide specific disclosures on data breaches, not general complaints.

Conclusion

The NSE circular on BRSR submission provides comprehensive guidance to ensure accurate and consistent reporting by listed companies. By following these guidelines and addressing the observations, companies can enhance their transparency and accountability in sustainability practices. This not only complies with regulatory requirements but also builds investor confidence and promotes sustainable development.

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Article Compiled by:-

~Mayank Garg

+91 9582627751

(LegalMantra.net Team)

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