ESG: Top 150 listed companies to subject their BRSR Core to “reasonable assurance” by FY 2023-24

ESG: Top 150 listed companies to subject their BRSR Core to “reasonable assurance” by FY 2023-24

Subject :Economy

Section: Capital market

In News: Market regulator SEBI has specified a “glide path” for the mandatory “reasonable assurance” of Core – Business Responsibility and Sustainability Reporting (BRSR Core), which is a novel ESG reporting framework.

Key Points:

• BRSR Core is a sub-set of the full BRSR that focuses on the critical elements of BRSR and mandates 49 parameters for ESG reporting.  BRSR is intended to ensure quantitative and standardised disclosures on environment, social and governance (ESG) parameters to enable comparability across companies, sectors and time. Such disclosures will aid investment decisions.
• SEBI had recently brought in changes to its listing obligations and disclosure requirement (LODR) regulations to empower itself to specify the date on which this mandatory assurance norm will come into effect and the manner in which such assurance must be obtained from time to time.
• The circular on BSR-Core is based on the recommendations of the ESG Advisory Committee constituted in May 2022. SEBI has updated its BRSR format and incorporated the BRSR Core’s new key performance indicators (KPIs).
• For this BRSR Core disclosure and assurance top 1,000 listed entities (by market capitalization), starting from the top 150 will be required to comply with the BRSR Core framework over the next three financial years.
• ESG disclosure for value chain
  • SEBI has now stipulated that ESG disclosures for value chain would be applicable to the top 250 listed entities (by market capitalisation) on a comply-or-explain basis from FY 2024-25. The limited assurance on this would be applicable on a comply-or-explain basis from FY 2025-26.
  • The framework has been introduced to ensure that the sustainability targets reached by the organization from their business operations reach down to their value chain.
  • the value chain shall encompass the top upstream and downstream partners of a listed entity, cumulatively comprising 75 per cent of its sales (by value) respectively for this purpose.
• Guidelines:
  • SEBI has now directed the boards of listed companies to ensure there is no conflict of interest with the assurance provider appointed for BRSR Core.
  • The BRSR Core disclosures and assurance for the value chain of listed entities will be reported under nine ESG attributes/key performance indicators (KPIs).
  • They are identified for assurance such as greenhouse gas (GHG) emissions, job creation in small towns, openness of business, gross wages paid to women and so on.