Sebi establishes a regulatory framework for listed companies’ value chain ESG reporting
SEBI’s recently released legal framework for listed firms regarding ESG (Environment, Social, and Governance) disclosures on supply chain and assurance would also include upstream and downstream partners.
Sebi established BRSR Core, a subset of the BRSR (Business Responsibility and Sustainability Report), in an effort to address the requirement for ESG disclosure assurance. BRSR Core contains nine Key Performance Indicators (KPIs) for various E, S, and G elements that need to be ensured. According to the framework, significant listed firms will be required to disclose information and get assurances for their value chain in accordance with the “BRSR Core.”
A few new KPIs, such as job creation in small towns, company transparency, and gross wages provided to women, have been identified for assurance while keeping in mind the applicability to the Indian market setting. Additionally, intensity ratios based on revenue that have been adjusted for buying power parity have been added for improved worldwide comparability. Additionally, in accordance with the BRSR Core, the Securities and Exchange Board of India (Sebi) has implemented disclosures and assurance for the value chain of listed entities. According to a circular from Sebi, ESG disclosures across the supply chain for the top 250 businesses will commence in 2024–2025 on a comply-or-explain basis, with assurance from the auditors starting the following year.
The listed company will provide disclosures for the value chain as per BRSR Core in its annual report. Accordingly, a listed entity’s top upstream and downstream partners, collectively accounting for 75% of its purchases or sales by value, would be included in the value chain. According to Sebi, listed businesses must disclose the KPIs in the BRSR Core for their value chain to the degree that they may be attributed to their transactions with that partner. Such reporting may be aggregated or divided into sections for upstream and downstream partners. The board of the listed firm must make sure the BRSR Core’s assurance provider has the skills required to offer reasonable assurance, according to Sebi.
The listed organization must also make sure that the assurance provider chosen to guarantee the BRSR Core does not have any conflicts of interest. For instance, it must be verified that the assurance provider or any of its associates do not sell their products to the listed organization or any of its group entities or offer any non-audit-related activities, such as consultancy services.
