{"id":2553,"date":"2026-10-12T08:17:38","date_gmt":"2026-10-12T08:17:38","guid":{"rendered":"https:\/\/pierag.com\/US\/?p=2553"},"modified":"2026-10-16T08:27:56","modified_gmt":"2026-10-16T08:27:56","slug":"brsr-value-chain-disclosures-identifying-the-2-partners-and-collecting-their-data","status":"publish","type":"post","link":"https:\/\/pierag.com\/US\/brsr-value-chain-disclosures-identifying-the-2-partners-and-collecting-their-data\/","title":{"rendered":"BRSR Value Chain Disclosures: Identifying the 2% Partners and Collecting Their Data"},"content":{"rendered":"

Why Value Chain ESG Disclosures Matter<\/h2>\n

As Environmental, Social and Governance (ESG) expectations continue to rise, companies are facing greater scrutiny not only over their own sustainability practices, but also over the environmental and social impacts across their value chains. Suppliers, vendors, customers and other business partners can represent a significant share of a company\u2019s ESG impacts and risks, making reliable value chain data increasingly important.<\/p>\n

The Securities and Exchange Board of India (SEBI)\u2019s Business Responsibility and Sustainability Reporting (BRSR) framework has brought greater focus to ESG reporting beyond a company\u2019s direct operations. Under the revised framework, value chain ESG disclosures are applicable to the top 250 listed entities by market capitalisation on a voluntary basis from FY2025-26, with disclosures centred around significant upstream and downstream partners identified through specified reporting thresholds. Assessment or assurance of these value chain disclosures is also voluntary, from FY 2026-27.<\/p>\n

The focus therefore shifts to two key questions: which value chain partners fall within the disclosure scope, and how can the relevant ESG data be collected from them?<\/p>\n

Identifying the 2% Value Chain Partners<\/h2>\n

The approach for identifying value chain partners has evolved since the introduction of the framework in 2023. The original framework identified value chain partners based on cumulative coverage of 75% of purchases and sales by value and was applicable on a comply-or-explain basis. \u00a0However, in 2025, SEBI revised the framework, introducing a 2% individual threshold for identifying value chain partners and making value chain ESG disclosures voluntary for the top 250 listed entities by market capitalisation from FY2025-26.<\/p>\n

A company\u2019s value chain typically encompasses both upstream and downstream partners. Upstream partners may include suppliers, vendors and other entities from whom the listed entity purchases goods or services, while downstream partners may include customers, distributors and other entities to whom the listed entity sells goods or services. Under the revised framework, upstream partners that individually account for 2% or more of total purchases by value and downstream partners that individually account for 2% or more of total sales by value fall within the value chain disclosure scope. Where a listed entity chooses to provide value chain ESG disclosures, it is expected to disclose the percentage of total purchases and sales covered by the partners included within the reporting scope.<\/p>\n

Illustration: How the 2% Threshold Works<\/h2>\n

Consider a listed entity with total purchases of \u20b91,000 crore during FY2025-26. Its eight largest suppliers are shown below; the remaining \u20b9140 crore is spread across many smaller suppliers, each below 2% of purchases.<\/p>\n

\"\"<\/p>\n

Suppliers A to G individually account for 2% or more of total purchases and therefore fall within the disclosure scope. Supplier H, however, accounts for 1% of purchases and therefore falls below the threshold.<\/p>\n

Furthermore, SEBI permits a listed entity to limit its value chain disclosures to partners collectively covering 75% of purchases and sales by value. In the example above, Suppliers A to D together account for 75% of purchases (30% + 20% + 15% + 10% = 75%). Therefore, the listed entity may choose to limit its disclosures to these suppliers while still achieving the specified coverage level.<\/p>\n

The same principle applies downstream, where customers, distributors or other partners individually accounting for 2% or more of sales by value fall within the disclosure scope. Disclosures may similarly be limited to partners collectively covering 75% of sales by value.<\/p>\n

Together, the 2% threshold and 75% coverage criteria help focus reporting on the most significant value chain partners.<\/p>\n

Collecting the Right ESG Data<\/h2>\n

Once the relevant value chain partners have been identified, the next step is determining and obtaining the ESG information required to support the listed entity\u2019s value chain disclosures.<\/p>\n

Under SEBI\u2019s framework, value chain ESG disclosures are aligned with the BRSR Core framework. Accordingly, relevant BRSR Core KPIs are reported to the extent attributable to the listed entity\u2019s business relationship with the value chain partner.<\/p>\n

The information collected from value chain partners may therefore span a range of environmental, social and business-related indicators, including:<\/p>\n