Focus: GS-III Indian Economy
Why in news?
Secretary, Ministry of Corporate Affairs (MCA) released the ‘Report of the Committee on Business Responsibility Reporting (BRR)’.
- Indian companies are aspiring to have global foothold and thus they cannot ignore the emerging trend of Corporate Governance i.e. Responsible Business.
- Due to increasing trends of Environmental, Social and Governance (ESG) investing, the demand for non-financial reporting is also growing and in this respect the Business Responsibility and Sustainability Report (BRSR) framework will set the stage for sustainable investing.
- As a first step towards mainstreaming the concept of business responsibility, the ‘Voluntary Guidelines on Corporate Social Responsibility’ were issued in 2009.
- These guidelines were subsequently revised as ‘National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, 2011 (NVGS)’.
- The Securities and Exchange Board of India (SEBI) mandated the top 1000 (as of 2019) listed entities by market capitalization to file Business Responsibility Reports (BRRs) from an environmental, social and governance perspective.
- These BRRs enabled business to demonstrate the adoption of the NVG principles and the attendant core elements with the intent of engaging businesses more meaningfully with their stakeholders going beyond regulatory financial compliance.
- Taking into account the national and international developments in the arena of business and human rights since 2011, the NVGs have been updated and released as NGRBC (National Guidelines on Responsible Business Conduct) to reveal alignments with the UNGPs, UN Sustainable Development Goals (SDGs), Paris Agreement on Climate change etc.
Committee on Business Responsibility Reporting
- The Ministry of Corporate Affairs had constituted a ‘Committee on Business Responsibility Reporting’ to develop new BRR formats for listed and unlisted companies.
- In its Report, the Committee recommended 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.
- 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.