Context: Sebi proposes changes to the Business Responsibility and Sustainability Reporting (BRSR) framework.

• The proposed changes include ESG disclosures for the top 250 listed entities' value chains, the introduction of Green Credits, and the redefinition of 'value chain' partners for ESG disclosures.

Key Proposed Changes

• Integration of the Green Credit Program:

• Companies and their value chain partners can generate Green Credits by planting trees on waste or degraded lands and river catchment areas.

• These credits will now be included as a leadership indicator under Principle 6 of the BRSR, which focuses on environmental respect and restoration.

• Redefinition of Value Chain (VC) Partners:

• The new definition covers significant partners, specifically those involved either upstream or downstream, who individually constitute 2% or more of the company’s purchases or sales by value.

• Reduces compliance burdens by limiting the scope to significant partners only.

• Reporting Flexibility:

• For FY 2024-25, reporting on value chain partners in the annual report is voluntary.

• Companies can opt to report either an assessment or assurance of their ESG data under the BRSR framework. This choice aims to reduce the regulatory burden and costs associated with the assurance process.

• Adjustments to BRSR Core:

• Companies now have the flexibility to choose between assessment and assurance for the nine Key Performance Indicators (KPIs) under the BRSR Core, which focuses on ESG factors.

Business Responsibility and Sustainability Reporting Framework

• BRSR is a mandatory disclosure mechanism for top 1000 listed companies or businesses to report their performance on Environmental, social, and corporate governance (ESG) parameters and demonstrate their commitment to responsible business practices.

• SEBI in 2021 replaced Business Responsibility Reports (BRR) with BRSR.

BRSR is rooted in the nine principles outlined in the National Guidelines for Responsible Business Conduct (NGRBC). The nine principles are:

1. Businesses should conduct and govern themselves with integrity, and in a manner that is ethical, transparent and accountable.

2. Businesses should provide goods and services in a manner that is sustainable and safe.

3. Businesses should respect and promote the well-being of all employees, including those in their value chains.

4. Businesses should respect the interests of and be responsive to all their stakeholders.

5. Businesses should respect and promote human rights.

6. Businesses should respect and make efforts to protect and restore the environment.

7. Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent.

8. Businesses should promote inclusive growth and equitable development.

9. Businesses should engage with and provide value to their consumers in a responsible manner.