Businesses are to be made responsible entities. To make them more serious about their contribution to society, the ministry of corporate affairs (MCA) has presented a new system called Business Responsibility and Sustainability Report (BRSR). A move for corporates to report all non-financial disclosures under the same single source.
It is an improvised version of the current requirement of business responsibility reporting. Under this regime, the businesses have to report how responsible and sustainable they are.
The requirement for reporting will be initiated in a gradual and structured fashion. It will follow two formats for documenting including a ‘comprehensive format’ and a ‘lite version’. This is to enhance the reporting by including more details of the company’s CSR (Corporate Social Responsibility) activities. Small unlisted companies should follow the lite version of the format, while 1,000 largest listed companies should follow the comprehensive format of filing BRSR.
The BSRS is likely to be integrated with the ministry’s website. This would ease the process for the companies as the information already uploaded by them on the portal will be automatically filled in the filing.
With businesses wanting to reach the global level, focusing on Corporate Governance is an important factor for Indian businesses. Secretary of the ministry has recommended the business associations and professional institutes to plan an advocacy campaign for BRSR, along with building capacity for members.
The goal is to encourage businesses to look beyond satisfying shareholders’ objectives and look for their social responsibility. The framework will also provide another criterion for evaluating the company to startup investors based on its value addition to society. Under BRSR, companies reveal their actions in alignment with principles in a more disciplined manner.
Over the long-term, the committee aims to develop an index from the data gathered through the BRSR filings. It will be a Business Responsibility Sustainability Index for companies.
BRSR is a part of MCA’s efforts to motivate businesses for Corporate Social Responsibility. Non-financial reporting is a growing trend as investing from the environmental, social, and governance perspective is increasing. As said by the director of SEBI, this social responsibility framework for businesses is a move towards establishing sustainable investing.
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Other important startup, freelancer and MSME news of last week:
- Nitin Gadkari calls for global investments in Highways, MSME sectors to spur growth. Read more here
- Govt. may allow co-op banks to lend under schemes for MSMEs. Read more here
- MSME revival may only be possible in the next fiscal. Read more here.
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