PoSH & ESG Reporting: What Investors & SEBI BRSR Now Require from Indian Companies

The integration of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (PoSH Act) into ESG reporting signifies a profound shift in how corporate India is viewed. Investors and regulatory bodies are increasingly scrutinizing companies not just on their financial performance but also on their commitment to ethical practices, social responsibility, and sound governance. The 'S' in ESG, particularly concerning employee well-being and a safe working environment, directly encompasses the principles and mandates of the PoSH Act. This convergence means that a company's approach to preventing and addressing sexual harassment is now a key indicator of its overall sustainability and ethical standing.

The Securities and Exchange Board of India's (SEBI) BRSR framework, effective from FY 2022-23 for listed entities, has brought PoSH compliance to the forefront of mandatory disclosures. The BRSR mandates companies to report on various aspects of their social responsibility, including policies and practices related to employee health, safety, and well-being. Specifically, under Principle 12 of the BRSR, companies are required to disclose their policies and procedures for preventing and addressing sexual harassment at the workplace. This includes details about the establishment and functioning of the Internal Committee (IC) as mandated by the PoSH Act, the number of complaints received and resolved, and the outcomes of such resolutions. Failure to provide adequate and transparent disclosures can impact investor confidence and regulatory standing.

Modern investors, especially institutional investors and those focused on sustainable investing, are looking beyond mere legal compliance. They are seeking evidence of proactive governance and a genuine commitment to creating safe and equitable workplaces. Strong PoSH compliance, demonstrated through a well-functioning IC, clear policies, regular training, and a transparent grievance redressal mechanism, signals to investors that a company:

• Values its employees and prioritizes their safety and dignity.
• Has robust internal controls and risk management practices.
• Is committed to ethical business conduct and good corporate citizenship.
• Is less susceptible to reputational damage and legal liabilities arising from workplace misconduct.

Companies that can effectively showcase their PoSH initiatives as part of their broader ESG strategy are likely to attract more investment and build stronger stakeholder relationships.

Several key provisions of the PoSH Act, 2013 and its Rules, 2013 are directly relevant to the disclosures required under the SEBI BRSR framework:

• Section 4 of the PoSH Act: Constitution of Internal Committee (IC). Companies must report on the existence and composition of their IC, ensuring it meets the requirements of at least four members, with a majority being women, and includes a member from a non-governmental organization or a women's rights advocate.
• Section 9 of the PoSH Act: Inquiry into Complaint. Disclosure of the process followed for inquiring into complaints, including timelines and fairness, is crucial.
• Section 10 of the PoSH Act: Recommendations of the IC. Reporting on the actions taken based on the IC's recommendations, such as disciplinary actions or preventive measures, is essential.
• Section 11 of the PoSH Act: Employer's Responsibilities. This section outlines broad employer duties, including framing PoSH policies, conducting workshops, and creating awareness. The BRSR expects companies to detail how they fulfill these responsibilities.
• Rule 7 of the PoSH Rules: Display of Notice. Companies must confirm that a notice about the provisions of the Act and the IC's contact details is prominently displayed at the workplace, a tangible aspect of awareness.

Demonstrating a proactive and effective approach to these provisions is key to meeting BRSR expectations.