SEBI Mandates BRSR Core Assurance & Value Chain ESG Disclosures: A Catalyst for Sustainable Growth
The Securities and Exchange Board of India (SEBI) has recently announced significant guidelines to strengthen sustainability reporting and practices among listed companies. Through a circular issued in July 2023, SEBI has mandated reasonable assurance of the BRSR Core metrics and ESG disclosures about the value chain of top-listed entities.
What is BRSR Core and why assure it?
- The BRSR Core is a subset of key ESG metrics within the Business Responsibility and Sustainability Report (BRSR). It comprises essential ESG performance indicators across 9 attributes like emissions, water usage, waste management, employee well-being, gender equality etc.
- Requiring reasonable assurance of the BRSR Core metrics will significantly enhance the reliability of ESG data disclosed. The assurance must be provided by an independent external agency with expertise in such verifications. This will promote greater transparency and accountability around listed companies’ sustainability commitments.
Key Highlights of Value Chain Disclosures
- In addition to their own operations, listed entities will also need to disclose ESG data in their value chain – including top suppliers and distributors. Such reporting will encompass partners accounting for at least 75% of the entity’s purchases and sales respectively.
- This value chain reporting is mandated on a comply-or-explain basis for the top 250 listed companies from 2024-25. Further, limited assurance of value chain disclosures will be applicable from 2025-26.
- By mandating value chain reporting, SEBI aims to encourage businesses to monitor and manage ESG impacts along their entire supply chain. This is critical for accelerating India’s sustainability transition.
The Way Forward
SEBI’s circular signifies a major advancement in sustainability regulations for India Inc. Assurance and value chain disclosures will compel companies to bolster their ESG commitments and strategies. While the reporting burden may increase initially, these disclosures will enable more informed and transparent sustainability performance tracking over the long term.
As stakeholders like investors, regulators and consumers increasingly demand ethical and eco-friendly business practices, such robust ESG reporting frameworks are vital for the future. SEBI’s circular is a key step in that direction.
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