Business Responsibility Reporting
The Ministry of Corporate Affairs (MCA) has recently released the ‘Report of the Committee on Business Responsibility Reporting (BRR)’ in New Delhi.
• Business Responsibility Report (BRR) is a disclosure of 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
Growth of BRR in India:
• The Corporate Voluntary Guidelines were came up in 2009.
• Endorsement of United Nations Guiding Principles on Business & Human Rights by India in 2011.
• MCA issued ‘National Voluntary Guidelines on Social, Environmental and Economical Responsibilities of Business’ which encourages reporting on environment, social and governance issues in 2011.
• SEBI mandates top 100 listed companies by market capitalization to file BRR based on NVGs in 2012.
• SEBI extends BRR reporting to top 500 companies by market capitalization in 2015.
• In 2018, a committee proposed that the BRR should be called the Business Responsibility and Sustainability Report (BRSR).
• National Guidelines on Responsible Business Conduct (NGRBC) released in 2019.
MCA will work closely with capital markets regulator SEBI for implementation of the ‘Business Responsibility and Sustainability Report (BRSR)’.
The panel has recommended that the BRSR could be integrated with MCA 21 portal as that would ensure that all information already filed on the portal by companies would be automatically filled while filing the BRSR.
The committee recommended two formats for disclosures: one ‘comprehensive format’ and the second a ‘Lite version’.
It recommended that the implementation of the reporting requirements should be done in a gradual and phased manner.
MCA 21 is used for submitting requisite filings to the ministry under the companies’ law.
One of the proposals is for having a guidance note on BRSR to enable companies to disclose their actions on the principles in a more meaningful manner.
As per the report, reporting may be done by top 1,000 listed companies in terms of their market capitalisation or as prescribed by markets regulator SEBI.
As a long-term measure, the Committee envisions that the information captured through BRSR filings be used to develop a Business Responsibility-Sustainability Index for companies.