Current Affairs Brain Booster for UPSC & State PCS Examination (Topic: Business Responsibility Report)

Brain Booster for UPSC & State PCS Examination

Current Affairs Brain Booster for UPSC & State PCS Examination

Topic: Business Responsibility Report

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Why in News?

  • Recently, the Ministry of Corporate Affairs (MCA) has released the ‘Report of the Committee on Business Responsibility Reporting (BRR)’.

Background

  • The ministry released the National Voluntary Guidelines (NVGs) on Social, Environmental and Economic Responsibilities of Business in 2011. The process of revising the NVGs began in 2018 in order to align them with the Sustainable Development Goals (SDGs) and the United Nations Guiding Principles on Business & Human Rights (UNGPs).
  • After stakeholder consultations, the National Guidelines on Responsible Business Conduct (NGRBC) was issued in 2019.
  • The NGBRC has been designed to assist businesses to embrace the principle of responsible conduct going beyond the requirements of regulatory compliance. The disclosure mechanism emanating from the NVGs, namely, the business responsibility report needed to be modified to reflect the NGRBC.
  • The committee on Business Responsibility was constituted for finalising business responsibility reporting formats for listed and unlisted companies under the National Guidelines on Responsible Business Conduct (NGRBC).

Key Recommendations

  • A new reporting framework called as the ‘Business Responsibility and Sustainability Report (BRSR)’ to better reflect the intent and scope of reporting on non-financial parameters. ( Increasing trends of Environmental, Social and Governance (ESG) investing, the demand for non-financial reporting is growing in India and in this regard the Business Responsibility and Sustainability Report (BRSR) framework aims to set the stage for sustainable investing.
  • Committee recommended two formats for disclosures: one ‘comprehensive format’ and the second a ‘lite version’.
  • The Committee further recommended that the implementation of the reporting requirements should be done in a gradual and phased manner.
  • The committee also recommended that the BRSR be integrated with the MCA21 portal. ( MCA 21 is used for submitting requisite filings to the ministry under the companies law.

Implementation

  • The principles of Business Responsibility Reporting are generic in nature and are applicable to all the companies.
  • As per the report, reporting may be done by top 1,000 listed companies in terms of their market capitalisation or as prescribed by markets regulator Securities and Exchange Board of India (SEBI).
  • The reporting requirement may be extended by MCA to unlisted companies above specified thresholds of turnover and/ or paid-up capital.
  • Smaller unlisted companies may adopt a lite version of the format, on a voluntary basis.

Significance

  • The SEBI through its ‘Listing Regulations’ in 2012 mandated the top 100 listed entities by market capitalization to file BRRs from an environmental, social and governance perspective.
  • As a long-term measure, the Committee envisions that the information captured through BRSR filings be used to develop a Business Responsibility-Sustainability Index for companies.
  • The endeavour of the committee has been to ensure that the BRSR reporting format would serve as a single source for all non-financial disclosures.