Business Responsibility and Sustainability Reporting

A company can say it cares about the environment. Investors need more than a sentence — they need numbers they can compare across companies.

That is what BRSR gives them. SEBI first asked India's top listed companies for a Business Responsibility Report (BRR) in 2012. It later replaced this with the Business Responsibility and Sustainability Reporting (BRSR) framework, which asks for standardised, quantitative disclosures on environmental, social and governance (ESG) factors.

For an AIF distributor, BRSR matters because it feeds the growing ESG theme in alternative investing. Investee companies that are listed, or that plan to list, are increasingly judged against these disclosures.

The timeline of the reporting requirement:

• August 2012 — SEBI's original Business Responsibility Reporting (BRR) norm covered only the top 100 listed entities.
• The BRR requirement was later widened to the top 500 and then the top 1,000 listed entities by market capitalisation.
• SEBI then introduced BRSR, whose disclosures became mandatory for the top 1,000 listed entities from FY 2022-23.
• A further SEBI circular mandated 9 specified Key Performance Indicators (KPIs) for ESG reporting on a company's value chain, disclosed separately as BRSR Core, as part of the Annual Report.
• 'Value chain' is defined by a threshold: the top upstream and downstream partners that cumulatively make up at least 75% of a listed entity's purchases or sales by value, respectively.
• SEBI has separately regulated ESG Ratings and ESG Rating Providers (ERPs) — a distinct framework governing the agencies that score companies on ESG, not the companies' own disclosures.

BRSR traces back to the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs), notified by the Ministry of Corporate Affairs in 2011.

Kavach Industries Ltd is India's 640th largest listed company by market capitalisation. Because it falls inside the top 1,000, it must file BRSR disclosures as part of its Annual Report from FY 2022-23 onward.

Kavach buys 70% of its raw material by value from five upstream suppliers and sells 80% of its output by value through three downstream distributors. Because each of these crosses the 75% by value threshold, both groups count as Kavach's 'value chain', and Kavach must report the 9 specified ESG KPIs for them under BRSR Core.

A Category II AIF running an ESG-themed strategy uses Kavach's BRSR Core disclosures — supplier and distributor ESG performance, not just Kavach's own — to screen it for a listed co-investment alongside its unlisted portfolio.

Chapter 3 (Concepts in Alternative Investment Funds Industry), section 3.14 (Environmental, Social and Governance), traces BRR's evolution into BRSR and gives the top-1,000, FY 2022-23 and 9-KPI figures directly. Expect a question distinguishing BRR from BRSR, or testing the 75%-by-value definition of a reporting company's value chain.

• BRSR is not the same as CSR. The workbook is explicit that Corporate Social Responsibility is "only a small part of ESG", and BRSR disclosure is a separate, wider reporting exercise.
• The threshold moved twice before BRSR arrived — top 100, then top 500, then top 1,000 — and it is the top 1,000 that carries the mandatory BRSR requirement from FY 2022-23.
• BRSR Core is the value-chain layer, not the whole of BRSR. A listed company files BRSR for itself regardless; the 9-KPI value-chain disclosure is an additional, narrower requirement.
• The 75% test applies separately to purchases and to sales — a company's upstream value chain and downstream value chain are identified independently.