Business Responsibility and Sustainability Reporting (BRSR) was introduced by The Securities and Exchange Board of India (SEBI) in May 2021. The purpose was to align focus on sustainability along with business responsibility. In July 2023, BRSR Core was introduced by SEBI to represent a focused subset of the wider BRSR framework, which mandates 49 parameters for ESG reporting, which stood at 800.

Listed companies were mandated to report BRSR Core disclosures and assurance for their value chain, focusing on 9 ESG attributes. The introduction of BRSR Core will bring about its set of challenges.

One of the primary concerns SEBI had was about the activities of unregulated ESG rating providers (ERPs). The increased reliance in the securities market on such unregulated ESG rating providers is a cause for concern as it poses a threat to investors, efficiency of the market, risk pricing, capital allocation, overall transparency and green washing.

Some of the challenges that companies may face while reporting BRSR Core:

1. Data collation from value chain providers: The biggest challenge that companies will face is collating data from their value chain providers. The complexity of the process of collecting data from multiple sources such as suppliers, contractors and other third parties will be both complex and time consuming. The next taxing exercise after collation of this data is going to the validation of it. Without accurate data the entire report could be compromised.

2. Need for assurance: ESG disclosures by companies are becoming animportant criteria for investors, shareholders and other stakeholders, the need for assurance becomes a necessary exercise to ensure the validity of the disclosures. This can pose a challenge for companies as they may need to invest in obtaining independent assurance on their ESG performance.

3. Cost: Implementing BRSR Core reporting can also be costly for companies as they may need to invest in new processes to collect and verify data, obtain assurance on their ESG performance, and comply with new reporting requirements. Costs can be incurred due to direct costs like setting up robust processes for data collection, data verification processes, training of staff, cost of independent assurance on their ESG performance and indirect cost like investing in capacity building and the training of value chain providers, training of stakeholders etc.

4. Handling sensitive data: Data required for BRSR reporting is extensive and involves multiple departments, offices, plants & subsidiaries. Companies may also face challenges in handling sensitive data while reporting BRSR Core. This can include protecting personal information, maintaining confidentiality, and complying with data protection regulations. A mechanism will need to be put in place to prevent unauthorized access or disclosure of sensitive information.

To tackle these hurdles, companies can leverage ESG reporting software’s, which keeps them updated on environmental, social, and governance (ESG) initiatives. Sustain, by Celusion Technologies is a ESG reporting software. It automates data collection from various sources, tracks progress toward ESG goals, and offers an automated framework to disclose successful ESG initiatives.

While there are several challenges that companies may face while reporting BRSR Core, using Sustain ESG software can help them overcome these challenges by automating data collection and verification processes, increasing awareness and expertise regarding new reporting requirements, streamlining their reporting process, collating data from value chain providers, managing increased levels of detail in reporting requirements, obtaining assurance on their ESG performance, reducing costs associated with implementing BRSR Core reporting, and handling sensitive data.