All-about the Mandatory Sustainability (ESG) Reporting

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  • 4 Min Read
  • By Taxmann
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  • Last Updated on 29 March, 2023

ESG Reporting

Table of Contents

  1. Importance of Sustainability
  2. Sustainable Development Goals
  3. Objectives of Sustainable Reporting
  4. Global Sustainability Standards
  5. BRSR Requirement in India
  6. BRSR Reporting
  7. NGRBC: 9 Principles
  8. Way Forward

Sustainable development is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

1. Importance of Sustainability

    • 1.3 billion tons of food is wasted worldwide every year. Just one-quarter of this could feed the 795 million undernourished people around the world who suffer from hunger.
    • According to the Guardian newspaper, an estimated 8.3 billion tons of plastic have been produced since the 1950s (that’s equivalent to the weight of more than 800,000 Eiffel Towers). Only 9% of this plastic has been recycled.
    • 73% of beach litter worldwide is plastic.
    • Over 75% of waste is recyclable, but only about 30% of it is recycled.
    • The UNHCR has warned that climate change could cause the displacement of 250m people across the world by 2050.
    • Earth Overshoot Day is the date on which humanity’s resource consumption for the year exceeds the Earth’s capacity to regenerate those resources that year. In 2000 the day took place in October. In 2016 it was in August. And it’s getting earlier each year.
    • Current statistics indicate that a mere 1% of the water on earth is freshwater. Given the change in climate, even that 1% is under threat, and demand could exceed supply by 40% by the year 2030.
    • 92% of the world’s population lives in places where air pollution exceeds safe limits, according to research from the World Health Organization (WHO).
    • People who live in high-density air pollution areas have 20% higher risk of dying from lung cancer than people living in less polluted areas.
    • There are more than 500 million cars in the world and by 2030 the number will rise to 1 billion. This means pollution levels will more than double.

2. Sustainable Development Goals

    • Eliminate Poverty
    • Erase Hunger
    • Establish Good Health and Well-Being
    • Provide Quality Education
    • Enforce Gender Equality
    • Improve Clean Water and Sanitation
    • Grow Affordable and Clean Energy
    • Create Decent Work and Economic Growth
    • Increase Industry, Innovation, and Infrastructure
    • Reduce Inequality
    • Mobilize Sustainable Cities and Communities
    • Influence Responsible Consumption and Production
    • Organize Climate Action
    • Develop Life Below Water
    • Advance Life On Land
    • Guarantee Peace, Justice, and Strong Institutions
    • Build Partnerships for the Goals

3. Objectives of Sustainable Reporting

    • Customer satisfaction and retention
    • Gain a competitive advantage
    • Provides accountability
    • Employee satisfaction and retention
    • Provide specific information instead of Greenwashing
    • Demonstrate Process

4. Global Sustainability Standards

    • COP 26: ‘comprehensive global baseline’ of sustainability disclosures
    • SASB formed in 2011 ~ Value Reporting Foundation June2021
    • ISSB – SASB Standards ~ IFRS SustainabilityDisclosure Standards
    • 77 Industry Standards

5. BRSR Requirement in India

SEBI – mandates top 1,000 listed companies by Market capitalisation to have mandated BRSR for FY 2022-23

Why BRSR matters?

  • BRSR to be integrated with MCA filing
  • Sustainability Index will be developed through

6. BRSR Reporting

Section A – General Disclosures

  • Details of the listed entity, products/services, operations, H/S/A
  • Markets served, employees related, representation of women
  • CSR details, transparency & disclosures compliances

Section B: Management and Process Disclosures

  • Policy & management processes
  • Governance, leadership & oversight

Section C: Principle-wise Performance Disclosures

  • Essential indicators (Mandatory)
  • Leadership indicators (Voluntary)

7. NGRBC: 9 Principles

PRINCIPLE 1: Businesses should conduct and govern themselves with integrity, and in a manner that is Ethical, Transparent and Accountable

  •  Training and awareness programmes
  • Details of fines/penalties/punishment/award/compounding fees/settlement amount paid in proceedings (by the entity or by directors/KMPs) with regulators etc.
  • Anti-corruption or anti-bribery policy and disciplinary action if taken by any law enforcement agency
  • Complaints with regard to conflict of interest
  • Process details of any corrective action or issues on corruption and conflict of interest

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

  • % of R&D and Capex to improve environment and social impacts of products and process to total
  • Procedure for sustainable sourcing
  • Reclaim of your products for reusing, recycling and disposing at the end of life
  • Extended Producer Responsibility (EPR) applicability to entity

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

  • Details of measures for the well-being of employees,workers
  • Details of retirement benefits
  • Accessibility of work places
  • Equal opportunity Policy as per the Rights of Persons with Disabilities Act, 2016
  • Return to work and Retention rates of permanent employees, workers that took parental leave
  • Grievance mechanism – receive and redress
  • Employees and worker membership in association/unions recognised by listed entity
  • Training given on health and safety measures and skill upgradation
  • Performance and career development reviews
  • Health and safety management system
  • Details of safety related incidents and measures taken
  • Complaints by worker/employees on working conditions and health/safety related
  • Assessment of health/safety and working conditions by third party and corrective actions

PRINCIPLE 4: Businesses should respect the interests of and be responsive to all its stakeholders

  • Processes for identifying key stakeholder groups of the entity
  • List stakeholder groups identified and frequency of engagement with them

PRINCIPLE 5: Businesses should respect and promote human rights

  • Training on human rights
  • Minimum wages details
  • Median remuneration/salary/wages –category-wise
  • Human right issue addressing mechanism – focal point, redress, complaints
  • Third party assessment of human rights compliances and corrective actions

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

  • Energy consumption and intensity
  • Site/facilities if identified under the Performance, Achieve and Trade (PAT) Scheme of the Government of India
  • Water – withdrawal and consumption
  • Air emission details
  • Greenhouse gas emission details
  • Waste management
  • Environmental impact assessment projects if any, compliancewith environmental laws/regulations

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

  • Affiliations with trade and industry chambers/associations
  • Corrective actions taken based on anti-competitive conduct by the entity, based on adverse orders from regulatory authorities

PRINCIPLE 8: Businesses should promote inclusive growth and equitable development

  • Details of Social Impact Assessments (SIA) of projects
  • Information on project(s) for which ongoing Rehabilitation and Resettlement (R&R)
  • Grievances mechanism for community
  • Input source from MSME/localsuppliers

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

  • Consumer complaints and feedback
  • Turnover relevant to environment, safe usage, recycling etc. to total turnover
  • Product recalls if any
  • Cyber security
  • Corrective actions taken on actions by regulators relating to advertising, delivery of essential products, cyber security etc.

8. Way Forward

    • Staff Awareness and training
    • Accuracy of information
    • Completeness
    • Multi-function co-ordination
    • SOP/Policies
    • Interaction with Suppliers, Management etc.

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

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