Top 10 challenges to BRSR reporting

May 8, 2023

SEBI's 'Business Responsibility and Sustainability Reporting' (BRSR) guidelines make it mandatory for the top 1,000 listed companies by market capitalisation to publish structured sustainability reports from FY 2022-23. Although companies may have the best of interests, filing of the Business Responsibility & Sustainability Reporting (BRSR) is posing challenges on multiple fronts for companies.

Let’s explore a few relevant challenges to gain insight into the difficulties that companies may encounter:

1. Data Collection & Verification: One of the primary requirements of the BRSR report is capturing of accurate & reliable data. If the data is compromised the entire report could be jeopardised. The source of this data is various departments, facilities, systems & machines of the organisation as well as external sources. Ensuring the accuracy & integrity of the data can be quite a challenge, requiring robust data collection, verification & validation process to be in place.

2. Lack of awareness and expertise: Although Business Responsibility Report (BRR) the predecessor of BRSR had been introduced in Nov, 2011, SEBI introduced the BRSR to align focus on sustainability along with business responsibility in the fiscal year 2021-2022. Awareness around BRSR framework is relatively low and companies might not have the expertise, internal capabilities to collect analyze and report sustainability related data.

3. Data Accuracy: The BRSR report is data heavy with 120 plus parameters across 9 core principles of sustainability. The data has to be collated from across various departments & facilities that the organisation may have. Ensuring data accuracy across wide range of areas can be a formidable task as the company needs to ensure there is no misrepresentation which would compromise the credibility of the BRSR report.

4. Sensitive data: BRSR reporting involves sharing of sensitive data such as employee data, for example. The company will need to ensure that it complies with the relevant data privacy & confidentiality regulation.  

5. Stakeholder Engagement: Identifying stakeholders both, internal and external, engaging with them, ensuring responsiveness and obtaining their inputs on sustainability related data could also be a huge challenge as it requires robust communication and collaboration.

6. Time consuming exercise: Given the extensive nature of data required for filing a comprehensive BRSR report, companies need to invest a significant amount of time & effort. A streamlined reporting process and effective time management is required to meet the reporting deadlines.  

7. Cost: BRSR reporting can add a substantial cost to the company to put the necessary systems & resources in place to harvest the data required for sustainability reporting. This will weigh especially heavily on smaller companies having limited resources.  

8. Reporting Transparency: The Company will require to report its sustainability initiative and transparently disclose sustainability performance, be it negative or positive. This could be challenging as it requires them to share their sustainability progress, challenges & future plans.

9. Green Washing: Green washing may involve selectively reporting positive sustainability achievements & underplaying or omitting negative ones leading to inaccurate or incomplete BRSR reporting.

10. Integration with Business Strategy: Integrating sustainability initiatives with the overall business strategy could be challenging. Companies will need to align their sustainability goals and performance with their long term business objectives & financial goals.

It’s important to note specific challenges may vary depending on the size, industry type and maturity level of the company. Addressing these challenges will require a robust data management system, effective reporting processes & strong commitment of the management to effectively perform & report on sustainability performance.

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