Previous Year Question
Consider the following statements:
I. The Reserve Bank of India mandates all the listed companies in India to submit a Business Responsibility and Sustainability Report (BRSR).
II. In India, a company submitting a BRSR makes disclosures in the report that are largely non-financial in nature.
Which of the statements given above is/are correct?
I only
II only
Both I and II
Neither I nor II
Correct Answer: B
Detailed Solution
Statement I is incorrect.
The requirement to submit a Business Responsibility and Sustainability Report—BRSR was issued by the Securities and Exchange Board of India—SEBI, not by the Reserve Bank of India.
Moreover, the mandate did not apply to every listed company in India. SEBI made BRSR mandatory from financial year 2022-23 for the top 1,000 listed entities by market capitalisation. Thus, the statement is incorrect both regarding the regulator and the scope of entities covered.
Statement II is correct.
A BRSR primarily contains non-financial disclosures concerning a company’s Environmental, Social and Governance—ESG performance. These may include energy and water consumption, greenhouse-gas emissions, waste management, employee safety, gender diversity, human rights, social responsibility, supply chains and consumer protection.
The BRSR framework is connected with the nine principles of the National Guidelines on Responsible Business Conduct—NGRBC. It helps investors and other stakeholders assess how a company manages the environmental and social effects of its business activities.
“Largely non-financial” does not mean that the report contains no quantitative or finance-related data. A company may be required to disclose certain expenditure figures, turnover-linked ratios and other measurable indicators. Nevertheless, its principal focus is ESG performance rather than the conventional profit and loss account or balance sheet.