Business Responsibility Report is a disclosure of the adoption of responsible business practices by listed companies to all its stakeholders. This is necessary for considering the fact that these companies have accessed funds from the public, have an element of public interest included, and are obligated to make exhaustive disclosures on a regular basis.
According to the sub-regulation (2)(f) of regulation 34 of Listing Regulations, the annual report shall comprise a business responsibility report explaining the initiatives taken by the listed entity from a social, environmental, and governance perspective in the prescribed format.
Securities Exchange Board Of India (SEBI) has prescribed a format for the 'Business Responsibility Report' as a compulsory requirement for the top 100 listed companies by SEBI’s Circular dated August 13, 2012. Other companies are encouraged to utilize the Business Responsibility Report for making disclosures to their stakeholders. Business Responsibility Report must be submitted as a section of the Annual Report.
The Business Responsibility Report framework is classified into five sections and these are as under:
Responsibility principles as envisaged by the National Voluntary Guidelines (NVGs) Securities Exchange Board of India (SEBI) had introduced the Business Responsibility Report requirement in the year 2012 and later rescinded the same. Over a period of years, SEBI has provided for Business Responsibility Reporting through the Regulation 34 (2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Regulations) by initially mandating this requirement for top 500 Listed entities in India to make Business Responsibility Report as a part of their Annual Report. In addition to this requirement, SEBI provided that the Listed entities which have listed their mentioned securities on SME Exchange, may on a voluntary basis contain Business Responsibility Report in their Annual Reports.
Furthermore, the mandate to publish the Business Responsibility Report with Annual Report for the top 1000 Listed companies was implemented through SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2019, with effect from 26 December 2019.
Every listed entity to which these Regulations apply must formulate a Business Responsibility Policy which has to be sanctioned and adopted by the Board members of the company. The said policy may list down all the objectives of the Policy, strategies, and principles that the company is required to follow in order to meet with the Regulation and implementation of Business Responsibility Reporting requirements.
The Board may also authorize any company personnel to oversee the implementation of the Policy. The Board may also review the policy from time to time and revise its strategies in order to best fit to completely comply with the Regulations. The companies which have formulated this Policy and the same has been sanctioned by the Board members, may publish it on their website, if any. This will indeed assist the stakeholders understand the policies, strategies, framework, and reporting structure adopted by the company.
Securities Exchange Board Of India has provided certain principles for Listed entities to assess compliance with social, environmental, and governance norms along with a particularly mentioned format to disclose their social, environmental, and governance practices to its shareholders. This format was suggestive in nature and companies may disclose any additional information under this report if it deems fit. However, the specified format provides a huge range of disclosure sections comprising inter-alia of the following which are as under:
SEBI had exempted those listed entities which have been submitting sustainability reports to overseas regulatory agencies or stakeholders based on internationally accepted reporting framework from preparing a separate report for the reason of meeting the reporting requirements mentioned in the Regulations and to furnish the same report to its stakeholders along with the details of the framework under which their Business Responsibility Report has been prepared and mapping of the principles included in these Regulations to the disclosures made in their sustainability reports.
In the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, in regulation 34(2)(f), for the words “five hundred” appearing after the word “top” and before the word “listed”, the words “one thousand” shall be substituted and in the proviso to clause (f), for the words “five hundred” appearing after the word “top” and before the word “listed”, the words “one thousand” shall be substituted.
Listed entities other than the top 1000 listed companies based on market capitalization and listed entities that have listed their specified securities on SME Exchange, may involve these business responsibility reports on a voluntary basis.
The key intention behind the Business Responsibility Report was to assist companies in self-identify how responsible and sustainable their business is. These reports also present insights about a company’s overall approach, socially, and economically, aiding various stakeholders to make wiser decisions. It helps provide a more transparent and participatory manner through which information can be more credible and accessible if followed in accordance with the prescribed standards.