BRSR Code – Framework for assurance and ESG disclosures forvalue chain

The Securities and Exchange Board of India (SEBI) has recently released Circular No. SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122 on July 12, 2023, which introduces the BRSR Core framework for assurance and
Environmental, Social, and Governance (ESG) disclosures for the value chain. This circular brings significant updates and amendments to the Business Responsibility and Sustainability Report (BRSR) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Applicability: Listed entities shall mandatorily undertake reasonable assurance of the BRSR Core, as per the glide path specified in the following table:

Key highlights of the circular are as follows:

• BRSR Core Framework: The circular introduces the BRSR Core as a subset of the BRSR, comprising Key Performance Indicators (KPIs) and metrics under 9 ESG attributes. The aim of the BRSR Core is
  to provide reasonable assurance by listed entities. It incorporates new KPIs, such as job creation,
  openness of business, and gross wages paid to women, and includes intensity ratios based on
  revenue adjusted for Purchasing Power Parity (PPP) for better global comparability.
• ESG Disclosures for Value Chain: The circular requires listed companies to disclose ESG information
  for their value chain in their Annual Reports. The value chain should include the major upstream
  and downstream partners, accounting for 75% of the entity’s purchases or sales by value. The
  scope of reporting and any assumptions or estimates made during the reporting process must be
  clearly disclosed.
• Assurance Provider: The circular emphasizes the importance of selecting an assurance provider
  with the necessary expertise. Listed entities are advised to ensure there is no conflict of interest, and
  assurance providers or their associates should not be engaged in selling products or providing nonaudit/non-assurance services to the listed entity or its group entities.

These updates underscore SEBI’s commitment to enhancing sustainability reporting, transparency, and
responsible business practices among listed entities in India. It also reinforces the importance of ESG
disclosures in measuring the environmental and social impact of businesses along their value chains.
Companies need to prepare for compliance with the new requirements and select qualified assurance
providers to navigate this evolving landscape effectively.

Syed Aman, Audit Associate, SW India