Recent amendment on Business Responsibility Reporting (BRR)

SEBI expands the ambit of Business Responsibility Reporting (BRR) by notification No. SEBI/LAD-NRO/GN/2019/45 dated 26.12.2019 (Securities and Exchange Board of India - Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2019. Before discussing the amendments, first we understand the concept and relevant provisions.

What is Business Responsibility Reporting?

Business Responsibility Report is a disclosure of the adoption of responsible business practices by a listed company to all its stakeholders. At a time and age when enterprises are increasingly seen as critical components of the social system, they are accountable not merely to their shareholders from a revenue and profitability perspective but also to the larger society which is also its stakeholder.

As per clause (f) of sub-regulation (2) of regulation 34 of Listing Regulations, the annual report shall contain a business responsibility report describing the initiatives taken by the listed entity from an environmental, social and governance perspective in the prescribed format* (Link is given in the last).

Evolution of Business Responsibility Reporting in India:

1. Corporate Voluntary Guidelines in 2009;
2. Endorsement of United Nations Guiding Principles on Business & Human Rights by India in 2011;
3. MCA issued ‘National Voluntary Guidelines on Social, Environmental and Economical Responsibilities of Business’ which encourages reporting on environment, social and governance issues in 2011;
4. SEBI mandates top 100 listed companies by market capitalization to file Business Responsibility Reports (BRR) based on NVGs in 2012;
5. SEBI extends BRR reporting to top 500 companies by market capitalization in 2015;
6. National Guidelines on Responsible Business Conduct (NGRBC) was released in 2019.

The BRR framework is divided into five sections

a) Section A: General Information about the Organisation - Industry Sector, Products & Services, Markets, other general information

(b) Section B: Financial Details of the Organisation - Paid-up capital, Turnover, Profits, CSR (Corporate Social Responsibility) spend.

(c) Section C: Other Details - BR initiatives at Subsidiaries and Supply-chain Partners

(d) Section D: BR Information - Structure, Governance & Policies for Business Responsibility

(e) Section E: Principle-wise Performance - Indicators to assess performance on the 9 Business Responsibility principles as envisaged by the National Voluntary Guidelines (NVGs)

Amendment

In the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, -

1. in regulation 34,- i. in sub-regulation (2), in clause (f), for the words "five hundred" appearing after the word "top" and before the word "listed", the words "one thousand" shall be substituted.
2. in the proviso to clause (f), for the words "five hundred" appearing after the word "top" and before the word "listed", the words "one thousand" shall be substituted.

Listed entities other than top 1000 listed companies based on market capitalization and listed entities that have listed their specified securities on SME Exchange, may include these business responsibility reports on a voluntary basis.

Market capitalization to be calculated as on March 31 of every financial year.

The High level Committee on CSR in 2018 was also of the same view that the ambit of reporting on BRR be expanded gradually and at this juncture, it be extended to top 1000 companies.

New Development - Recent Changes by notification dated 5^th May 2021

SEBI through a notification dated 5 May 2021 has made amendments to certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR).
Among various amendments, one relates to the discontinuance of the requirement of submitting BRR by listed companies after FY2021-22. As per the notification, companies would be required to submit a new report on ESG parameters, namely Business Responsibility and Sustainability Report (BRSR) in the following manner-

• Mandatory from FY2022-23: For top 1,000 listed companies by market capitalization;
• Voluntary for FY2021-22: For top 1,000 listed companies by market capitalization;
• Voluntary for other companies: Listed companies (other than top 1,000) and companies which have listed their specified securities on the Small and Medium Enterprises (SME) exchange may voluntarily submit BRSR in place of BRR effective FY2021-22 onwards.

Additionally, SEBI through a notification dated 10 May 2021 has prescribed the format of the new report, BRSR along with the guidance note to enable companies to interpret the scope of disclosures required to be made in the report.

This issue of First Notes aim to summarise the key features of the new report along with highlighting the differences between BRSR and BRR.

Format of BRSR and related guidance note, please check the below link -
https://www.sebi.gov.in/legal/circulars/may-2021/business-responsibility-and-sustainability-reporting-by-listed-entities_50096.html

The author can also be reached at sandy673711@gmail.com

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.