While globally many countries / regions are still deciding on their sustainability disclosures, India has its guidelines pretty much cemented around the BRSR. With FY 2022 being a voluntary disclosure year, most listed companies will start to gear up for Round 2 of the disclosures for FY 2024.
The new year has come and gone and the familiar rush for information gathering for the year has begun. Envint advised multiple companies in the manufacturing and services sector to prepare for the BRSR disclosures last year. What can companies do differently in Round 2? How can they make this value accretive for the organization?
A few thoughts below:
1. Going beyond the superficial: A random reading of a few first-time BRSRs point towards superficial and shallow responses to qualitative questions. While they have served the purpose of checking the box, the reader is not left any wiser about the company’s material risks or opportunities. The BRSR is indeed structured in a tight manner, but it gives enough room for companies to explain the story behind the numbers.
2. Getting assurance ready: Assurance has been mandated for the top 150 listed companies from FY 2024 with more companies coming under the ambit in the following years. External assurance helps in ironing out internal deficiencies in data capture and reporting. The BRSR is still very much in the early stages and limited external decisions are currently based on BRSR disclosures. But as ESG ratings and investments mature in India, the accuracy and fairness of disclosures become important. This is a good time for companies to become aware of systemic changes required for data capture and validation. And that might necessitate investing in the right digital tool to not just assist in the disclosure but to validate and analyze the data.
3. Raising the bar: The first round ensured that certain prior steps like Scope 1 and 2 assessment were completed to enable disclosure. The second round can aim for leadership indicators like water withdrawal in areas of stress or details of stakeholder consultations on ESG, etc. Of course these will differ from sector to sector and also depend on organizational maturity, but leadership indicators offer opportunities for organizations to talk about their sustainability strategy in more nuanced terms.
A cautionary note on greenwashing before we conclude. ASCI guidelines issued in Nov 2023 will be in force from Feb 2024. While this is related to consumer protection and not BRSR, the expected stand of the regulators on claims related to sustainability is quite obvious.
So what’s your strategy for BRSR Round 2?
