SEBI Proposes Inclusion Of Green Credits And Redefinition Of Value Chain Partners Under BRSR Framework

The proposals can be traced back to the Union Budget for FY 2023-24, which highlighted the need to simplify compliance processes and reduce costs for businesses. Consequently, an Expert Committee was formed, comprising industry experts and regulatory officials, to evaluate existing regulations which included those pertaining to BRSR.

One of the focal points of SEBI's proposed changes involves redefining the concept of "value chain partners." Under the revised framework, value chain partners would encompass both upstream and downstream entities of a listed company, individually accounting for 2% or more of the company's purchases or sales by value, respectively.

Additionally, SEBI suggested that for the initial reporting year (FY 2024-25), disclosures regarding ESG (Environmental, Social, Governance) performance of value chain partners would be voluntary.

A notable addition to the BRSR framework is the proposal to incorporate 'Green Credits' as a leadership indicator. Green Credits, generated through environmentally sustainable activities such as tree plantation on waste or degraded lands, would serve as a metric for assessing a company's environmental stewardship.

Under the proposed framework, listed companies and their value chain partners would be required to disclose the number of Green Credits generated, both individually and collectively.

SEBI's proposals also state a terminology shift from "assurance" to "assessment" concerning BRSR disclosures. This modification provides listed entities with the option to either undertake an assessment or seek assurance of their ESG data.

SEBI has invited public comments and feedback on the proposed amendments to the BRSR framework until June 12, 2024. Comments can be submitted through the SEBI's website.

Click Here To Read/Download Consultation Paper