Interviews

Unlocking the role of ESG and the BRSR Core in transforming the Indian Corporate Sustainability

CXOToday has engaged in exclusive interaction with Ms. Smitha Shetty Regional Director, APAC – Achilles Information Ltd.

 

  1. What is the BRSR Core framework, and why was it introduced in India?

The global push for ESG transparency, exemplified by regulations like the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), has heightened the demand for comprehensive sustainability reporting. Introduced by SEBI in July 2023, India’s Business Responsibility and Sustainability Reporting (BRSR) Core framework responds to this trend by mandating standardized ESG disclosures, particularly in areas relevant to the Indian market.

The BRSR Core represents a subset of the comprehensive BRSR and includes a specific set of key performance indicators (KPIs) / metrics across nine ESG attributes. What sets this framework apart is its focus on metrics unique to the Indian market. It aims to drive improvements in areas such as job creation in rural areas, enhanced transparency in business practices and better wages for women. A notable feature of the BRSR Core is its emphasis on the value chain, requiring large companies to collaborate with their upstream and downstream partners to enhance sustainability across their operations. SEBI recently issued a consultation paper based on recommendations from an expert committee comprising representatives from corporations, investors, rating providers, mutual funds, industry bodies, academicians, technical experts, and other stakeholders. It was chaired by Shri. Navneet Munot, MD and CEO of HDFC AMC, the expert committee’s recommendation paper is available in the public domain and SEBI sought public feedback for the consultation until June 12th. Overall, the BRSR Core framework signifies a significant advancement in promoting sustainability practices in India’s corporate landscape while driving a positive change and making Indian businesses more viable and compliant per international reporting standards.

 

2. How does this differ from previous sustainability reporting standards?

The BRSR Core is distinct from previous standards due to its focus on India-specific KPIs and its phased implementation approach. Starting with the top 150 companies by market capitalization, the applicability will gradually expand to 1000 by FY 2026-27. Additionally, the top 250 listed companies must disclose their value chain’s ESG footprint from FY 2024-25. BRSR Core takes a more stringent approach than the broader BRSR by requiring reasonable assurance on disclosures. However, SEBI’s recent recommendations propose flexibility, allowing companies to choose between “assessment” or “assurance.” This balances compliance ease with stakeholders’ varying needs for scrutiny.

 

3. What are the economic benefits of implementing BRSR Core for Indian businesses?

Implementing the BRSR Core framework presents a compelling economic opportunity for Indian businesses. It’s not just about compliance; it’s a strategic advantage. Firstly, enhanced ESG performance attracts responsible investors. In an increasingly ESG-conscious investment landscape, companies with strong sustainability credentials become more attractive to investors seeking long-term value and risk mitigation. This heightened investor interest can lower the cost of capital, providing a significant financial advantage.

Secondly, the framework drives operational efficiency through resource optimization. A closer examination of environmental and social factors often reveals areas where resource utilization can be improved, leading to cost savings and a reduced ecological footprint. This is a win-win for businesses and the planet.

Finally, the BRSR Core framework helps build a stronger brand reputation. Consumers today are increasingly drawn to brands that demonstrate a commitment to sustainability and social responsibility. Embracing the BRSR Core can enhance a company’s reputation, foster customer loyalty, and ultimately drive revenue growth.

In conclusion, implementing the BRSR Core framework is not a burden but a catalyst for positive economic outcomes. It attracts investors, optimizes operations, and strengthens brand image, all contributing to a more resilient and profitable business model in the long run.

 

4. What are the common misconceptions about BRSR Core, and how can they be addressed?

Several misconceptions surround BRSR Core. Some view it as just another compliance exercise, overlooking its strategic potential for innovation and value creation. Others believe it’s only relevant for large corporations, when aligning with its principles can benefit businesses of all sizes. The perceived complexity and cost of implementation are also concerns, but resources like our BRSR Core module in the MyAchilles platform can simplify the process. Furthermore, the framework’s flexibility and alignment with international standards dispel the notions that it’s solely focused on environmental concerns or isolated from global ESG trends. Addressing these misconceptions requires education, awareness campaigns, and leveraging technology to empower businesses to embrace BRSR Core as a catalyst for positive change.

 

5. What future trends do you foresee in the evolution of BRSR Core and its impact on Indian businesses?

BRSR Core’s evolution will likely include deeper integration with value chains, requiring companies to extend sustainability practices to their contractors and sub-contractors. This will necessitate increased collaboration with assessment/assurance providers to effectively mitigate risks throughout the supply chain. We can also anticipate the framework applicability expanding to more than 1000 companies to encompass more businesses, driving sustainability practices deeper into the corporate landscape. We can also expect more comprehensive metrics, clearer definitions of value chain partners, and the introduction of new indicators like Green Credits.

BRSR Core data will increasingly be used for internal decision-making, risk management, and strategic planning, not just for compliance and reporting. This will require sophisticated data management and analytics capabilities. For Indian businesses, these trends underscore the importance of proactively embracing BRSR Core and leveraging technology to manage their ESG performance.

 

6. How does a SAAS based platform help in ESG strategy? 

SaaS-based platforms play a pivotal role in ESG strategies by streamlining data collection, analysis, and reporting. They automate processes, ensure data accuracy, and provide valuable insights for decision-making. These platforms facilitate seamless collaboration across the value chain and offer scalability to meet evolving reporting requirements.

Integrating a SaaS platform with managed solutions enhances this further by providing expert guidance and support for suppliers, ensuring a cohesive and compliant ESG approach. The network effect of connecting multiple buying organizations and suppliers on a single platform reduces the burden on individual entities and fosters collaboration. In conclusion, SaaS-based platforms, especially when integrated with managed solutions, are indispensable for navigating the complexities of an evolving regulatory landscape and achieving ESG goals. They empower businesses with data-driven insights, facilitate collaboration, and enable effective risk management across the value chain.