BRSR Report Assurance: A Comprehensive Guide

This mandate sparked a common question among organizations:

Who should conduct this assurance?
Traditionally, financial audits are the domain of Chartered Accountants (CAs). However, the BRSR Core parameters extend beyond financial expertise into environmental and technical domains. A CA qualification alone may not suffice to adequately assess these non-financial metrics. Auditing organizations staffed solely with CAs would need to collaborate with technical experts to ensure a thorough evaluation of these aspects. As a result, certification bodies with prior experience in Environmental, Social, and Governance (ESG) reporting—already familiar with assessing such parameters—have become the preferred choice for BRSR Core assurance.

Another question that arose was whether the BRSR report, which is typically released alongside the Annual Report, must also be signed off by CAs. SEBI clarified that this is not necessary.

This means:
The BRSR report can be assessed by non-financial institutions, provided they possess the requisite competency to evaluate the environmental and social metrics involved.

SEBI emphasized two critical factors for selecting assessors: independency and competency.

To ensure independence, SEBI specified that ‘the assurance provider must not have any conflict of interest with the organization. This includes a prohibition on the assurance provider or its associates selling products or offering non-audit/non-assurance services (such as consulting) to the listed entity or its group entities. In essence, the selection of assessors hinges on their ability to deliver an unbiased and technically proficient evaluation.’

Part 2: What Assurance Standard Should Be Chosen for BRSR Report Assurance?

While SEBI mandates a "reasonable level" of assurance for BRSR Core reporting, it has not prescribed a specific assurance standard, leaving organizations to determine the most suitable framework.

The BRSR Core parameters, a subset of the broader BRSR report, span environmental and human rights-related principles. For ESG reports like BRSR—categorized as non-financial declarations—two internationally recognized verification standards dominate: AA1000AS v3 and ISAE 3000. Additionally, India has its own adaptation of ISAE 3000, known as SSAE 3000.

All verification standards share a common goal: to design and implement a process that minimizes risk and instils confidence in readers that the reported data and claims are accurate. However, subtle differences exist between these standards, and organizations must understand these nuances before engaging assurance providers. Below is an overview of the two most popular standards used for BRSR assurance.

International Standard on Assurance Engagements (ISAE 3000)

ISAE 3000 is a globally accepted standard for assurance engagements beyond audits or reviews of financial information. Issued by the International Auditing and Assurance Standards Board (IAASB), it is well-suited for verifying non-financial reports like BRSR. Given its flexibility and widespread adoption by auditing bodies and financial institutions, ISAE 3000 is likely to align with SEBI's expectations, even though no specific standard is mandated.

A key advantage of ISAE 3000 is its provision for both "reasonable" and "limited" levels of assurance, making it adaptable to varying regulatory requirements.

To practice ISAE 3000, assessors must adhere to the quality control guidelines outlined in ISQC 1 (International Standard on Quality Control 1), a standard defined by the IAASB for firms conducting audits, reviews, and other assurance engagements. There are no separate licensing, accreditation, or registration fees required to issue verification reports following the guidelines of this standard, making it a practical choice for many organizations.

Accountability 1000 Assurance Standard (AA1000AS v3)

AA1000AS, developed by Accountability—a global advisory and standards firm—is a specialized standard tailored for ESG report verification. It places significant emphasis on stakeholder engagement and inclusivity in decision-making processes, guided by four core principles: Inclusivity, Materiality, Responsiveness, and Impact. The standard offers two types of assurance—Type 1 and Type 2—which determine the depth and coverage of the audit (akin to "limited" and "reasonable" levels in other standards). Additionally, it defines two levels of assurance—Moderate and High—based on the evidence-gathering methodology, which may involve internal or external sources. However, there is no direct equivalence between AA1000AS’s "types" and "levels" and the "reasonable" or "limited" categories of other standards.

To practice AA1000AS, assessors must qualify as Certified Sustainability Assurance Practitioners (CSAP) through Accountability, and their firms or certification bodies must hold a license to use the standard. Each verification report must be registered on Accountability’s website, with a fee charged based on the organization’s size. Upon registration, Accountability provides a unique logo for use in verification reports or confirmation letters, adding a layer of credibility.

Comparing the Standards and Emerging Trends

In India, both ISAE 3000 and AA1000AS are widely used for BRSR report verification, though ISAE 3000 enjoys greater preference due to its flexibility, lower barriers to entry, and alignment with traditional auditing practices. Meanwhile, in November 2024, the IAASB introduced a new ESG-specific standard, the International Standard on Sustainability Assurance (ISSA) 5000. While promising, ISSA 5000 is still gaining traction and has yet to achieve widespread adoption.

Conclusion:

Choosing the right assessors and assurance standard for BRSR reporting is a critical decision for organizations aiming to comply with SEBI’s mandates. Assessors must bring both technical competency and independence to the table, while the selected assurance standard—be it ISAE 3000, AA1000AS, or an emerging option like ISSA 5000—should align with the organization’s goals and regulatory expectations. By carefully navigating these choices, companies can ensure credible, transparent, and reliable sustainability reporting that meets stakeholder needs and regulatory requirements alike.

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