Sameer Goyal
Sustainability used to be just a trendy term in boardrooms, but has now become a regulatory must-have. Companies worldwide are being compelled to disclose their operation’s impact on people, the planet, and profits. The European Union’s European Sustainability Reporting Standards (ESRS) are considered the most comprehensive ESG reporting framework, putting them at the forefront of this movement. The ESRS was implemented under the Corporate Sustainability Reporting Directive (CSRD). It establishes a high standard by mandating sustainability reporting, third-party assurance, and disclosures related to the entire value chain.
India’s Business Responsibility and Sustainability Reporting (BRSR) framework emphasizes responsible business practices that are anchored in India’s developmental priorities.
In this piece, we take a closer look at how BRSR and ESRS stack up against each other across five key areas: scope, principles, disclosure requirements, assurance, and usability. Although the ESRS is more comprehensive; for many companies in emerging markets, BRSR is a much more realistic place to start. Both are indicative of their distinct regulatory environments and capabilities. ESRS needs to stay practical, or it risks overwhelming companies. BRSR, meanwhile, has to go deeper if it wants to stay relevant.
Introduction: One Objective, Two Frameworks
Over the years, the concept of corporate responsibility has transformed significantly. Voluntary CSR has evolved into a set of formal requirements that are driven by regulators, investors, and other stakeholders. ESG isn’t an afterthought anymore—it’s central to how investors, regulators, and even consumers judge a company.
To understand this transformation, we examine the EU’s ESRS, which is considered the gold standard, and India’s BRSR, which is emerging as a critical compliance instrument for Indian companies. Despite their shared ultimate objective of conducting business in a responsible and transparent manner, they exhibit significant disparities in terms of ambition, structure, and depth.
The ESRS: A Comprehensive European Model
The ESRS, which was implemented under the CSRD, is poised to revolutionize the manner in which European businesses disclose non-financial information. It introduces the concept of double materiality, which mandates firms to broaden the concept of materiality from just financial to one that includes a view of impact on stakeholders and society. This concept is applicable to more than 50,000 companies.
The framework encompasses a variety of topics, including climate, biodiversity, workforce conditions, and anti-corruption. It necessitates that organizations examine their supply chains and consumer networks, as well as their own walls, and report on the repercussions. ESRS is both rigorous and enforceable, as reports must be submitted in a machine-readable format (iXBRL) and verified through third-party assurance.
The BRSR: India’s Pragmatic Approach
India’s Business Responsibility and Sustainability Reporting (BRSR) framework is a bold move forward for a nation that is currently grappling with significant social challenges and rapid industrial growth. It is applicable to the top 1,000 listed companies by market capitalization, as mandated by SEBI in 2021.
BRSR is founded on the National Guidelines on Responsible Business Conduct (NGRBC), which prioritize inclusive development, environmental care, and ethical conduct. The report is composed of three sections:
1. General disclosures, including the company profile, ownership, and workforce
2. The management approach to sustainability issues
3. Key performance indicators that are consistent with the nine ESG principles
SEBI’s launch of BRSR Core in 2023 shows that things are moving toward more credible and measurable reporting. This version subjected selected indicators to limited assurance.
Comparative Analysis: ESRS vs. BRSR So how do these two frameworks actually compare?
Let’s break it down.
1. Scope
| Characteristic | ESRS (European Union) | BRSR (India) |
| Coverage | ~50,000 organizations | Top 1,000 listed companies |
| Global Presence | EU subsidiaries of MNCs | Domestic matters |
| Value Chain | Mandatory disclosures throughout the value chain | International operations only; suppliers optional |
Inference: The ESRS has a significantly broader scope in terms of what should be reported.
2. Principles and Materiality
● A double materiality approach is required by ESRS, which encompasses not only what is pertinent to investors but also what is important to people and the environment.
● BRSR emphasizes a stakeholder-oriented perspective that is derived from India’s own responsible business principles.
Inference: ESRS is more technically precise and comprehensive than BRSR.
3. Transparency Coverage and Depth
● ESRS includes 1,000+ data points, including Scope 3 emissions, just transition measures, and anti-corruption lobbying.
● BRSR encompasses approximately 140 indicators, which are a combination of qualitative and quantitative components. Many disclosures are currently voluntary.
Inference: ESRS provides more comprehensive, standardized metrics, while BRSR prioritizes progressive adoption and adaptability.
4. Mechanisms of Assurance
● ESRS necessitates limited assurance at present, with reasonable assurance becoming mandatory in subsequent periods.
● BRSR Core introduces assurance for a subset of metrics, starting with the top 150 companies.
Inference: Assurance is becoming a regulatory trend; however, BRSR is still in its early stages in comparison to ESRS.
5. Integration and Usability
● ESRS is fully integrated into company management reports and must be submitted in digital format.
● BRSR reports are currently separated documents that have not been digitally integrated.
Inference: ESRS aligns sustainability data with financial disclosures, creating a unified reporting ecosystem.
Where BRSR Shines—and Where It Can Grow
BRSR recognizes the resource constraints of Indian enterprises and provides a practical approach to sustainability compliance. It is pertinent to India’s overarching policy objectives due to its emphasis on social inclusion and its alignment with the SDGs.
However, as investment becomes increasingly ESG-driven, the BRSR will need to match the global standards, which means more quantitative metrics, assurance-ready formats, and eventually, convergence with frameworks like ISSB’s IFRS S1/S2 or even the ESRS itself.
Conclusion: Two Routes to a Common Goal
BRSR and ESRS reflect the capacities and conditions of their respective territories. The EU has established a detailed, enforceable framework, while India has implemented a flexible, mindful framework that integrates companies into the sustainability movement without becoming overwhelming.
But as ESG continues to drive investment and policy, both systems must evolve. ESRS needs to stay practical, or lest it overwhelms companies. BRSR, meanwhile, has to go deeper if it wants to stay relevant.
References
1. Securities and Exchange Board of India (SEBI). (2023, July 12). BRSR Core: Framework for assurance and ESG disclosures for value chain.
https://www.sebi.gov.in/legal/circulars/jul-2023/brsr-core-framework-for-assurance-and-e sg-disclosures-for-value-chain_73854.html
2. European Financial Reporting Advisory Group (EFRAG). (2023, July 31). EFRAG welcomes the adoption of the Delegated Act on the first set of European Sustainability Reporting Standards (ESRS) by the European Commission.
https://www.efrag.org/en/news-and-calendar/news/efrag-welcomes-the-adoption-of-the-d elegated-act-on-the-first-set-of-european-sustainability
3. European Commission. (2023). Corporate Sustainability Reporting Directive (CSRD) overview.
https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-repor ting-and-auditing/company-reporting/corporate-sustainability-reporting_en
4. Global Reporting Initiative (GRI). (2022). Interoperability between GRI and other ESG frameworks.
https://www.globalreporting.org/about-gri/news-center/2022-04-06-gri-and-esrs-interoper ability/
5. IFRS Foundation. (2023, June 26). IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.
https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s1-gener al-requirements/
6. Organisation for Economic Co-operation and Development (OECD). (2023). Sustainability reporting trends and gaps around the world.
https://www.oecd.org/corporate/sustainability-reporting
7. PricewaterhouseCoopers (PwC). (2023). CSRD and double materiality: 10 pitfalls companies should avoid. PwC United States.
https://www.pwc.com/us/en/services/esg/library/csrd-double-materiality.html
About the contributor: Sameer Goyal is an MBA student at IIM Indore and a fellow of EPAYF 2.0 – Environment Policy and Action Youth Fellowship, Cohort 2.0.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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Acknowledgment: This article was posted by Riya Rawat, researcher at IMPRI.
