ESG and Sustainability

Reporting
Raj Mullick
15th July 2022
Index

• Sustainability and ESG

• Sustainable Development Definition
• ESG
• Material topics for ESG reporting and Strategy
• Frameworks and Ratings
• BRR to BRSR
What is the right terminology?

Green Economy
Sustainability
Circular Economy
Sustainable Development

Regenerative Economy Corporate Social Investment (CSI)

Environmentalism

Environment, Health & Safety (EHS)

Environment Social and Governance (ESG)

Circularity
Social Responsibility Other
What is the right terminology?

All lead to the same intent and definition

Sustainable Development Definition

Sustainable development was defined in the World Commission on Environment and Development's 1987 Brundtland
report ´Our Common Future` as
'development that meets the needs of the present without compromising the ability of future generations to meet
their own needs'.

Our common future popularized the most universally accepted Six Interconnected Focus Areas of Brundtland
definition of "Sustainable Development”
Commission
1. Population and Human Resources
2. Food Security: Sustaining the Potential
3. Species and Ecosystems: Resources for Development
4. Energy: Choices for Environment and Development
5. Industry: Producing More with Less
6. The Urban Challenge

 Balancing needs, wants and limitations

RO = Retail outlet

Source: [Link]
ESG = Environment, Social and Governance
Way Forward (Cont’d)
While it is important for a company to have effective sustainability strategies and policies in place, it is equally important
to communicate these to all the stakeholders. The Company’s annual report and Investors/ Analysts meets provide a good
platform to communicate the company’s efforts to a wider audience.

The ESG Assessment Spectrum

Environmental Social Governance

▪ Water use ▪ Employee Management ▪ Board Composition
▪ Resource use and biodiversity ▪ Supply Chain Management ▪ Board independence
▪ Functioning and Experience
▪ Water generation and recycling ▪ Communities
▪ Management track record and control
▪ Energy and Emissions ▪ Customers ▪ Disclosures and shareholder relations
▪ Compliance/Controversy checks
Material topics to consider for ESG reporting & strategy
Way Forward (Cont’d)
ESG includes several topics that are material to the company. Strategies and roadmaps need to be created for all the relevant
material topics. These may include the following:
I. Environment:
▪ Climate change and Emission reduction (example: GHG emissions, Nox, Sox, TPM, VOC emissions, Energy consumption and
efficiency)
▪ Water management (examples: water recycled, water withdrawn, water consumed, any freshwater consumption)
▪ Waste Management (examples: hazardous and non-hazardous waste management, materials recycled)
The Company while assessing any environmental footprint and impact mitigation initiatives should keep in mind the
4R philosophy – Reduce, Reuse, Recycle and Remove
II. Social:
▪ Employee engagement and Learning and Development (examples: employee trainings and hours, career growth opportunities)
▪ Diversity, Equity and Inclusion (examples: inclusion initiatives for gender, skill ability and generation,
gender pay gap, ethics and grievance redressed)
▪ Health and Safety (examples: LTFIR reduction targets, near miss learnings, indecent reporting)
III. Governance:
▪ Board diversity (example: number of women on the Board)
▪ Board level ESG performance monitoring and involvement
Frameworks and Ratings

Global ESG Frameworks Global ESG Ratings

There are multiple national

and global ESG Frameworks
and Ratings.

Four important frameworks

to consider are the following:
1. GRI
2. IR
3. BRSR
4. WEF-IBC
Business Responsibility Report – History

Business Responsibility Report (BRR) is a disclosure of adoption of responsible business practices by a listed company to
all its stakeholders.

Applicability of the mandate

July 2011 August 2012 December 2015 November 2019

Ministry of Corporate Business Responsibility Mandate extended for top Mandate extended for top
Affairs, Government of India Reporting (BRR) was 500 listed companies of 1,000 listed companies
introduced NVG which mandated for Top100 listed India by market of India by market
focused in principles on companies for disclosure capitalization capitalization
Social, Environmental and on ESG parameters in .
Economic responsibilities of annual report. The reports
business to be prepared in line with
NVG principles

Organizations can comply with mandate by disclosing information on the ESG parameters in the format prescribed by SEBI which should form part of the annual
report OR sustainability report which are based on internationally accepted reporting framework
Way Forward – NGRBC and BRSR

▪ In order to align the National Voluntary Guidelines (NVGs) with the emerging global concerns, the NVGs were revised
and released as National Guidelines on Responsible Business Conduct (NGRBCs) in March 2019
▪ In March ’21, SEBI board decided to introduce new requirements for sustainability reporting by listed entities i.e.,
Business Responsibility and Sustainability Reporting (BRSR) which shall replace BRR
▪ In May’21, SEBI issued circular noting departure from BRR to BRSR for top 1000 listed entities (by market
capitalization) and mandated reporting BRSR w.e.f FY 22-23

Why BRSR Matters

Business Responsibility
BRSR will be integrated
Sustainability index will be
with filings made on
developed through info
MCA21 portal
captured

Source: [Link]
NGRBC Principles

Nine Guiding principles of NGRBC

BRSR and the NGRBC Principles
• Across the Sections, BRSR asks about 140 questions
• Across the 9 Principles, BRSR asks for 122 indicators (as shown below)
• Each Principle has Essential (i.e. mandatory) and Leadership (i.e. voluntary) Indicators.

Source: CRISIL ESG Sustainability Yearbook 2022

BRSR Essential Indicators and the IR framework overlap

Manufactured and Social and Relationship

Natural Capital Human Capital Financial Capital Capital

▪ Energy and water ▪ Employee and ▪ Percentage ▪ Grievance

consumption workmen contribution to total mechanisms and
▪ Air emissions representation turnover by top 3 complaints for each
(Permissible limit (permanent and products/ services stakeholder group
and actual value) non-permanent) in ▪ Percentage i.e., communities,
and liquid total workforce contribution to total business partners,
discharges for top 3 ▪ Women turnover by top 3 investors,
major facilities representation (no. plants shareholders,
and %) in board and customers, value
▪ Solid waste ▪ Percentage
key managerial chain partners
generated contribution to total
positions turnover by top 3
▪ Safety related markets (national
information and international)
BRSR Questions and Summary
Annexure 1 issued by SEBI lists the questions and their format. A summary of the questions is given below:
Principle Questions Summary
Principle 1 Questions are regarding
• fines/ punishments levied,
• bribery and corruption related policies and cases,
• corrective actions taken,
• awareness programs for Board and value chain partners, and
• process put in place to manage conflict of interest involving Board members.

Principle 1: Sample Question

1 Percentage coverage by training and awareness programmes on any or all the Principles in the financial year:

Total number of training and awareness Topics / principles covered under the training and its %age of persons in respective category covered
Segment programmes held impact by the awareness programmes
Board of Directors

Key Managerial Personnel

Employees other than BoD
and KMPs
Workers

Source: [Link]
BRSR Questions and Summary

Principle Questions Summary

Principle 2 Questions are regarding
• R&D investments,
• sustainable sourcing,
• quantities of and processes to reuse/ recycle/ dispose product waste at its end of life,
• Extended Producer Responsibility (EPR) applicability and plan,
• product Life Cycle Assessments (LCA) conducted and the outcomes/ concerns/ actions, and
• quantity of recycled/ reused input material used.

Principle 2: Sample Question

1 Has the entity conducted Life Cycle Perspective / Assessments (LCA) for any of its products (for manufacturing industry) or for its services (for service industry)? If yes, provide
details in the following format?
Boundary for which the Life Whether conducted by Results communicated in public domain
% of total Turnover Cycle Perspective / independent external agency (Yes/No)
NIC Code Name of Product /Service contributed Assessment was conducted (Yes/No) If yes, provide the web-link.

2 If there are any significant social or environmental concerns and/or risks arising from production or disposal of your products / services, as identified in the Life Cycle
Perspective / Assessments (LCA) or through any other means, briefly describe the same along-with action taken to mitigate the same.
Product / Service Description of the risk / concern Action Taken
BRSR Questions and Summary
Principle Questions Summary
Principle 3 Section requests data about employees, workers and value chain partners. Questions include
• benefits for employee and worker well-being (insurance, parental leave, day-care, gratuity, PF, ESI),
• accessibility for the differently abled,
• equal opportunity provider policy,
• return to work and retention rate (by gender),
• employee grievance redressal process and complaints data,
• union membership data,
• training hours data (by gender),
• career development reviews,
• health safety management system and processes,
• safety incidents (LTIFR, incidents, fatalities, rehabilitation),
• Health-safety-working conditions assessments conducted for employees & value chain partners & any corrective actions taken,
• statutory payments to value chain partners, and
• transition assistance program for any separations.

Principle 3: Sample Question

11 Details of safety related incidents, in the following format:
Safety Incident/Number Category FY Current Financial Year FY Previous Financial Year
Employees
Lost Time Injury Frequency Rate (LTIFR) (per one million-person hours worked) Workers
Employees
Total recordable work-related injuries Workers
Employees
No. of fatalities Workers
Employees
High consequence work-related injury or ill-health (excluding fatalities) Workers
BRSR Questions and Summary

Principle Questions Summary

Principle 4 Questions are regarding
• stakeholder identification and consultation,
• materiality assessment, and
• engagement with vulnerable/ marginalized stakeholder groups.

Principle 4: Sample Question

Provide the processes for consultation between stakeholders and the Board on economic, environmental, and social topics or if consultation is delegated,
how is feedback from such consultations provided to the Board.
BRSR Questions and Summary
Principle Questions Summary
Principle 5 Section requests for quantitative and qualitative data regarding Human rights practices for employees,
workers and value chain partners. Questions include
• data on human rights training,
• minimum wages paid, median remuneration/ wages (for Board, KMP, employees and workers),
• human rights committee/ personnel,
• grievance redressal mechanism for human rights issues,
• complaints and prevention mechanisms (for sexual harassment, discrimination, child labour, forced
labour, wages or other human rights issues for employees and value chain partners), and
• human rights assessments and due diligence conducted and corrective actions taken.

Principle 5: Sample Question

3 Details of remuneration/salary/wages, in the following format:
Male Female
Median remuneration/ salary/ wages Median remuneration/ salary/ wages of
No. of respective category No. respective category
Board of Directors
Key Managerial Personnel
Employees other than BoD and KMP
Workers
BRSR Questions and Summary
Principle Questions
Principle 6 Environment section’s mandatory quantitative data requirements include
• energy consumption,
• water withdrawal by source, water consumption,
• air emissions (NOx, SOx, PM, VOC),
• GHG emissions (Scope 1 and Scope 2),
• waste generated by type, waste recovered (through recycling, reusing or other), waste disposed (incinerated,
landfill and other),
• environmental compliances, and
• external audit/ assurance for all quantitative data.
• Mandatory qualitative data is requested for PAT targets and progress on targets, zero liquid discharge
mechanisms, GHG emission reduction projects, waste management practices, operations in ecologically
sensitive areas where environmental clearances are required, and environmental impact assessment (EIA)
projects and their results.
Voluntary or Leadership Indicators include
• energy consumption from renewable and non-renewable sources,
• water discharge by destination, water withdrawal, consumption and discharge in areas of water stress,
• Scope 3 emissions break-up,
• details of impact on biodiversity in the ecologically sensitive areas,
• innovative technologies to reduce environmental impact or improve resource efficiency,
• business continuity and disaster management plan,
• adverse impact and mitigation along the value chain, and
• environment assessment of value chain partners.
BRSR Question Examples
Principle 6: Sample Questions
3 Provide details of the following disclosures related to water, in the following format:
Parameter Current Financial Year Previous Financial Year
Water withdrawal by source (in kilolitres)
(i) Surface water
(ii) Groundwater
(iii) Third party water
(iv) Seawater / desalinated water
(v) Others (rainwater)
Total volume of water withdrawal (in kilolitres) (million m3)
Total volume of water consumption (in kilolitres)
Turnover (INR in crore)
Water intensity per rupee of turnover (Water consumed / turnover)

Indicate if any independent assessment/ evaluation/assurance has been carried out by an external agency? (Y/N) If yes, name of the external agency.

6 Provide details of greenhouse gas emissions (Scope 1 and Scope 2 emissions) & its intensity, in the following format:
Parameter Unit Current Financial Year Previous Financial Year
CO2 Metric tonnes of CO2 equivalent
CH4 Metric tonnes of CO2 equivalent
N2O Metric tonnes of CO2 equivalent
Flare emissions Metric tonnes of CO2 equivalent
Total Scope 1 emissions (Break-up of the GHG into CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, if available) Metric tonnes of CO2 equivalent
Total Scope 2 emissions
(Break-up of the GHG into CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, if available) Metric tonnes of CO2 equivalent
Turnover (INR in crore)
Total Scope 1 and Scope 2 emissions per rupee of turnover (kgCO2/Rs.)
Indicate if any independent assessment/ evaluation/assurance has been carried out by an external agency? (Y/N) If yes, name of the external agency.
BRSR Questions and Summary
Principle Questions Summary
Principle 7 Questions include list of industry associations, corrective actions taken on issues regarding anti-
competitive behaviour/ adverse orders from regulators, and details of public policy positions
advocated.

Principle 7: Sample Question

1 a. Number of affiliations with trade and industry chambers/ associations.

b. List the top 10 trade and industry chambers/ associations (determined based on the total members of such body) the entity is a member of/ affiliated to.
S. No. Name of the trade and industry chambers/ associations Reach of trade and industry chambers/ associations (State/National)
1
BRSR Questions and Summary
Principle Questions Summary
Principle 8 Section requests data on Social Impact Assessments (SIA) of projects and mitigation actions,
Rehabilitation and Resettlement (R&R) projects, mechanisms for community grievances, inputs
materials sourced from MSMEs and same/neighbouring districts, CSR projects and spend by district,
preferential procurement from marginalized /vulnerable groups, and benefits from IP based on
traditional knowledge and corrective actions taken in case of dispute.

Principle 8: Sample Question

1
Details of Social Impact Assessments (SIA) of projects undertaken by the entity based on applicable laws, in the current financial year.

Name and brief details of Whether conducted by independent Results communicated in Relevant Web
project SIA Notification No. Date of notification external agency (Yes / No) public domain (Yes / No) link
BRSR Questions and Summary
Principle Questions Summary
Principle 9 Section includes customer complaints data and corrective actions, feedback mechanism, product
recalls, data privacy policy and data breaches, product display information and compliances, and
consumer awareness about safe and responsible use of products.

Principle 9: Sample Question

3 Number of consumer complaints in respect of the following:
Current Financial Year Previous Financial Year
Pending resolution at the Pending resolution at the
Filed during the year end of year Remarks Filed during the year end of year Remarks
Data privacy
Advertising
Cyber-security
Delivery of essential
services
Restrictive Trade
Practices
Unfair Trade Practices
Other

Source: [Link]
Thank you

24