Executive Summary:
This circular introduces the BRSR Core framework for assurance and ESG disclosures for the value chain of listed entities. It follows the recommendations of the ESG Advisory Committee and public consultation, amending the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015. Top listed entities must adopt the updated BRSR format beginning FY 2023-2024 and undertake reasonable assurance of the BRSR Core based on a specified glide path.
Key Points / Main Content:
BRSR Core and Updated BRSR:
* BRSR Core is a subset of the BRSR, featuring key performance indicators (KPIs) under 9 ESG attributes, including new KPIs relevant to the Indian market and intensity ratios based on revenue adjusted for Purchasing Power Parity (PPP).
* The BRSR format has been revised to incorporate new KPIs of BRSR Core, as per Annexure II.
* The BRSR Core specifies the data and approach for reporting and assurance, with clarifications that the approach is a base methodology, and any changes or industry-specific adjustments must be disclosed.
* The BRSR Core contains a cross-reference to the disclosures contained in the BRSR for ease of reference.
* Applicability:
* Top 1000 listed entities by market capitalization must disclose as per the updated BRSR format, as part of their Annual Reports from FY 2023-2024.
* Mandatory reasonable assurance of the BRSR Core for top listed entities by market capitalization will be phased in as follows:
* FY 2023-24: Top 150 entities
* FY 2024-25: Top 250 entities
* FY 2025-26: Top 500 entities
* FY 2026-27: Top 1000 entities
ESG Disclosures for Value Chain:
* Listed companies must make ESG disclosures for their value chain, as per the BRSR Core, within their Annual Reports.
* Value chain encompasses the top upstream and downstream partners, cumulatively comprising 75% of purchases and sales by value, respectively.
* KPIs in the BRSR Core for the value chain should be reported to the extent attributable to the listed entity's business with that partner, segregated or aggregated.
* The scope of reporting, assumptions, and estimates must be clearly disclosed.
* Applicability:
* ESG disclosures for the value chain are applicable to the top 250 listed entities by market capitalization on a comply-or-explain basis from FY 2024-25.
* Limited assurance of the above is applicable on a comply-or-explain basis from FY 2025-26.
Assurance Provider:
* The Board of the listed entity must ensure the BRSR Core assurance provider has the necessary expertise for reasonable assurance.
* The listed entity must ensure no conflict of interest exists with the appointed assurance provider.
Impact Analysis:
Listed Entities:
* Impact: Required to adopt the updated BRSR format, undertake assurance of the BRSR Core, and disclose ESG data for their value chain based on market capitalization and timelines.
* Action Required: Review and update reporting processes, select qualified assurance providers without conflicts of interest, and prepare for phased implementation of BRSR Core assurance and value chain disclosures.
Recognized Stock Exchanges:
* Impact: Responsible for disseminating the circular's provisions to all listed entities and publishing it on their websites.
* Action Required: Notify listed entities about the new requirements and publish the circular on their websites.
Assurance Providers:
* Impact: Potential increase in demand for BRSR Core assurance services; must ensure they possess the required expertise and avoid conflicts of interest.
* Action Required: Develop expertise in BRSR Core assurance and ensure compliance with conflict-of-interest guidelines.
Key Entities Referenced
Securities and Exchange Board of India: Regulatory body for securities markets in India, often referred to as SEBI.
BRSR Core: A subset of the Business Responsibility and Sustainability Report (BRSR) consisting of key performance indicators (KPIs) under ESG attributes, used for assurance by listed entities.
Business Responsibility and Sustainability Report: A reporting framework prescribed by SEBI for listed entities to disclose their performance against environmental, social, and governance (ESG) parameters.
ESG Advisory Committee: A committee advising SEBI on matters related to Environmental, Social, and Governance (ESG) factors.
SEBI Listing Obligations and Disclosure Requirements Regulations, 2015: Regulations governing the listing obligations and disclosure requirements for companies listed on stock exchanges in India.
Financial Year 2023-2024: The financial year from April 1, 2023, to March 31, 2024, relevant for the applicability of the updated BRSR format.
Securities and Exchange Board of India Act, 1992: The act of parliament that established the Securities and Exchange Board of India (SEBI).
All Recognized Stock Exchanges: Refers to all stock exchanges in India that are officially recognized by SEBI.
CIRCULAR
SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122 July 12, 2023
To,
All listed entities
All Recognized Stock Exchanges
Sir / Madam,
Subject: BRSR Core – Framework for assurance and ESG disclosures for
value chain
1. SEBI vide Circular No. SEBI/HO/CFD/CMD-2/P/CIR/2021/562 dated May 10,
2021 had prescribed the Business Responsibility and Sustainability Report
(BRSR) which was subsequently incorporated in the Master Circular No.
SEBI/HO/CFD/PoD2/CIR/P/2023/120 dated July 11, 2023. Based on the
recommendations of the ESG Advisory Committee and pursuant to public
consultation, the Board decided to introduce the BRSR Core for assurance by
listed entities. The Board further decided to introduce disclosures and assurance
for the value chain of listed entities, as per the BRSR Core.
2. The provisions of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (“LODR Regulations”) in this regard, have been amended vide
Gazette notification no. SEBI/LAD-NRO/GN/2023/131 dated June 14, 2023.
3. BRSR Core and Updated BRSR
3.1 The BRSR Core is a sub-set of the BRSR, consisting of a set of Key
Performance Indicators (KPIs) / metrics under 9 ESG attributes. Keeping in
view the relevance to the Indian / Emerging market context, few new KPIs have
been identified for assurance such as job creation in small towns, open-ness
of business, gross wages paid to women etc. Further, for better global
comparability intensity ratios based on revenue adjusted for Purchasing Power
Parity (PPP) have been included. The format of BRSR Core for reasonable
assurance is placed at Annexure I. The BRSR format after incorporating newKPIs of BRSR Core is placed as Annexure II. Accordingly, the BRSR format
as prescribed in Annexure 16 of the aforementioned Master Circular stands
revised.
3.2 In order to facilitate the verification process, the BRSR Core specifies the data
and approach for reporting and assurance. It is however clarified that the
approach specified is only a base methodology. Any changes or industry
specific adjustments / estimations shall be disclosed.
3.3 For ease of reference, the BRSR Core contains a cross-reference to the
disclosures contained in the BRSR.
3.4 Applicability
3.4.1 From FY 2023 – 2024, the top 1000 listed entities (by market capitalization)
shall make disclosures as per the updated BRSR format, as part of their
Annual Reports.
3.4.2 Listed entities shall mandatorily undertake reasonable assurance of the
BRSR Core, as per the glide path specified in the following table:
Financial Year Applicability of BRSR Core to top listed entities
(by market capitalization)
2023 – 24 Top 150 listed entities
2024 – 25 Top 250 listed entities
2025 – 26 Top 500 listed entities
2026 – 27 Top 1000 listed entities
4. ESG Disclosures for value chain
4.1 Disclosures for value chain shall be made by the listed company as per BRSR
Core, as part of its Annual Report. For this purpose, value chain shall
encompass the top upstream and downstream partners of a listed entity,
cumulatively comprising 75% of its purchases / sales (by value) respectively.
4.2 Listed entities shall report the KPIs in the BRSR Core for their value chain to
the extent it is attributable to their business with that value chain partner. Such
reporting may be segregated for upstream and downstream partners or can
be reported on an aggregate basis.4.3 The scope of reporting and any assumptions or estimates, if any, shall be
clearly disclosed.
4.4 Applicability
4.4.1 ESG disclosures for the value chain shall be applicable to the top 250 listed
entities (by market capitalization), on a comply-or-explain basis from FY
2024-25.
4.4.2 The limited assurance of the above shall be applicable on a comply-or-
explain basis from FY 2025 - 26.
5. Assurance provider
5.1 The Board of the listed entity shall ensure that the assurance provider of the
BRSR Core has the necessary expertise, for undertaking reasonable
assurance.
5.2 The listed entity shall ensure that there is no conflict of interest with the
assurance provider appointed for assuring the BRSR Core. For instance, it
shall be ensured that the assurance provider or any of its associates do not
sell its products or provide any non-audit / non-assurance related service
including consulting services, to the listed entity or its group entities.
6. The Stock Exchanges are advised to bring the provisions of this circular to the
notice of all listed entities and also disseminate the same on their websites.
7. The Circular is issued in exercise of the powers conferred under Section 11(1) of
the Securities and Exchange Board of India Act, 1992 read with Regulation 101
of the LODR.
Yours faithfully,
Surabhi Gupta
General Manager
Corporation Finance Department
Supervision, Enforcement and Compliance Division - II
+91-22-26449315
surabhig@sebi.gov.in