NGRBC Principle 1 — Ethics, Transparency, Accountability

What Principle 1 covers

The National Guidelines on Responsible Business Conduct (NGRBC) were issued by the Ministry of Corporate Affairs in 2018 and form the backbone of SEBI’s Business Responsibility and Sustainability Report (BRSR) format. Of the nine NGRBC Principles, Principle 1 covers ethics, transparency, and accountability — the foundational governance principle that underpins the entity’s conduct in all its operations.

In BRSR-format terms, Principle 1 covers ethics through:

• Essential disclosures on Code of Conduct training and awareness, conflicts of interest, fines and penalties imposed during the reporting year, and the Openness of Business disclosure — the BRSR Core KPI under P1, capturing concentration of purchases from trading houses, concentration of sales to dealers / distributors, and related-party transactions in purchases, sales, loans / advances, and investments
• Leadership disclosures (for the Top 1,000 listed entities) on political contributions, anti-corruption awareness for value-chain partners, and anti-corruption due diligence — with applicability judgement on scope where the indicator depends on entity-specific facts

The contextual legal background for many P1 disclosures is the broader Indian governance regime — Companies Act, 2013 (especially §177 on audit committee, §188 on related-party transactions, §149/177 on independent director and audit-committee responsibilities), SEBI LODR Regulations (especially Regulation 23 on related-party transactions and Regulation 24 on subsidiary governance), the Prevention of Corruption Act, 1988, and entity-specific industry regulators (RBI for banking, IRDAI for insurance, etc.). These are background for interpretation; the BRSR P1 disclosures themselves are governed by the SEBI BRSR Format and the Industry Standards on Reporting of BRSR Core (December 2024 circular).

This page is the reference hub for Batchwise’s coverage of P1.

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The Essential indicators (mandatory for every BRSR filer)

The BRSR format Section C, Principle 1 Essential indicators cover the items below — illustrative paraphrases; the SEBI BRSR format itself is the authoritative source for the exact wording and reporting structure of each indicator:

• Anti-corruption / Code of Conduct training and awareness — % of employees and workers covered by training on the entity’s Code of Conduct, anti-corruption / anti-bribery policies, and conflicts of interest, by cohort and category
• Conflicts of interest disclosure — number of complaints received during the reporting year on conflicts of interest involving directors and key managerial personnel, with action taken
• Fines and penalties — monetary or non-monetary penalties imposed by regulators / enforcement agencies during the reporting year, including SEBI / stock exchange penalties, settlement or compounding amounts, with the matter disclosed
• Corrective actions taken during the year on any P1-related complaints or proceedings
• Awareness of NGRBC principles for the entity’s leadership and key managerial personnel (typically through periodic refresher training)
• Openness of Business disclosure — the multi-component disclosure that is the BRSR Core KPI under P1, covering three buckets: (a) concentration of purchases from trading houses, (b) concentration of sales to dealers / distributors, and (c) related-party transactions in purchases, sales, loans / advances, and investments. See the dedicated spoke page for the components and the prescribed conventions.

The Openness of Business disclosure is referenced in many BRSR Core summaries as Question 9 of the Principle 1 Essential indicators — the Core KPI is built on top of the Essential disclosure, with reasonable assurance applied to the prescribed sub-metrics.

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The Leadership indicators (Top 1,000 listed entities)

The Leadership indicators below are part of the BRSR format for the Top 1,000 listed entities, and voluntary for entities outside the Top 1,000.

The Leadership indicators are outside the BRSR Core KPI assurance set — only the Openness of Business Core KPI under P1 is in the Core reasonable-assurance mandate. The Leadership disclosures form the qualitative narrative around the assured Core KPI; entities can request limited-assurance procedures over selected Leadership items as an extended-scope engagement (a separate matter from the Core mandate).

For several Leadership items, the entity must make an applicability judgement on scope before responding — the value-chain anti-corruption awareness disclosure depends on which partners the entity considers in scope; the political-contributions disclosure depends on the entity’s political-contribution policy and any contributions made during the year. Where applicability or scope judgement is involved, the disclosure includes both the response and the documented basis for the applicability call — and the basis itself is what makes the disclosure interpretable.

Leadership indicators (illustrative practical paraphrases — refer to the SEBI BRSR Format for exact wording):

1. Awareness programmes for value-chain partners — practical paraphrase: coverage and content of awareness sessions or training extended to value-chain partners on the entity’s anti-corruption / Code of Conduct policies
2. Political contributions — total monetary contributions made by the entity to political parties or candidates during the reporting year, with the channel disclosed (electoral bonds, electoral trusts, direct contributions where permitted)
3. Anti-corruption due diligence — practical paraphrase: disclosure of the entity’s anti-corruption due diligence framework, applied during M&A activity, large-vendor onboarding, or other material business decisions

A “not applicable” against a Leadership indicator that involves applicability judgement should be substantiated in the entity’s documentation.

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The 1 BRSR Core KPI under P1

KPI	What it covers	Methodology page (when published)
Openness of Business	Multi-component disclosure capturing (a) concentration of purchases from trading houses, (b) concentration of sales to dealers / distributors, and (c) the share of related-party transactions (RPTs) in purchases, sales, loans / advances, and investments. The exact components, formulae, and prescribed conventions are set by the BRSR Core taxonomy and the SEBI Industry Standards on Reporting of BRSR Core (December 2024 circular).	Openness of Business

The dedicated spoke page (publishing next, closing the W4 cluster) covers the components, the prescribed conventions, the worked example, and the source-document evidence specific to this Core KPI.

For the assurance engagement that covers this KPI, see BRSR Core Assurance.

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Relationship to other governance and transparency regimes

Many P1 disclosures sit alongside underlying compliance regimes that govern the same activities. The BRSR Openness Core KPI is not a re-disclosure of any of these underlying regimes — it is a separate BRSR reporting construct that sits on top of the same underlying data, sliced and presented per the BRSR Core format. The audit-trail is shared, the metric construction is BRSR-specific:

Underlying regime	What it governs	BRSR P1 connection
Companies Act, 2013 §188	Related-party transaction approval and disclosure for all companies	The Openness Core KPI’s related-party component is built on top of the entity’s §188 RPT data
SEBI LODR Regulation 23	Material related-party transaction approval requirements for listed entities (audit committee + shareholders)	Same RPT data feeds the Openness Core KPI; LODR-23 thresholds determine the entity’s “material” RPT classification
Companies Act, 2013 §177	Audit committee composition and remit, including RPT review	Audit committee minutes are typically a P1 evidence document
Prevention of Corruption Act, 1988	Indian anti-corruption framework	Underlying statute for the entity’s anti-corruption policy referenced in P1 disclosures
Whistle Blower / Vigil Mechanism (LODR Reg 22)	Confidential reporting of unethical behaviour	Referenced in P1 grievance-mechanism disclosures
Indian Accounting Standard (Ind AS) 24	Related-party disclosure in financial statements	The accounting-standard definition of related parties typically frames the BRSR Openness related-party data

The audit-trail for P1 disclosures spans all of these — the BRSR Core engagement on the Openness KPI typically draws on the same RPT register that the statutory audit / LODR-23 review draws on.

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Source-document evidence

The full evidence-document inventory is on Document Evidence Requirements. For Principle 1 specifically:

Code of Conduct + anti-corruption training

• Code of Conduct policy document with date of last review by the board
• Training attendance registers for Code of Conduct and anti-corruption training, by cohort and date
• Acknowledgement records — annual acknowledgement of the Code of Conduct by employees and workers
• Anti-corruption / anti-bribery policy with date of last review

Conflicts of interest

• Conflict-of-interest declaration register for directors and key managerial personnel
• Audit committee minutes referencing any conflict-of-interest matters reviewed during the year

Fines and penalties

• Regulator correspondence during the reporting year — SEBI, stock exchange notices, RBI / IRDAI / sectoral regulator correspondence as applicable
• Penalty / settlement orders received during the year with the matter disclosed
• Compounding application records where applicable

Openness of Business (the Core KPI evidence)

• Vendor master with trading-house tagging — flag for purchases from trading houses vs other vendor types
• Customer master with dealer / distributor tagging — flag for sales to dealers / distributors vs other customer types
• Related-party transaction register — the entity’s RPT log per Ind AS 24 / §188 / LODR-23, used as the source for the related-party components
• Audit committee minutes documenting RPT approvals and reviews during the year
• Loans, advances, and investments register — the underlying data for the related-party loans / advances / investments component

Leadership (Top 1,000)

• Value-chain partner training records for the anti-corruption awareness Leadership indicator
• Political contribution records — electoral bond purchase records, electoral trust contribution records, direct contribution records (where permitted)
• Anti-corruption due diligence records — M&A due diligence files, large-vendor onboarding due diligence

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Cross-references to other principles

• Principle 5 — Human Rights overlaps with P1 on training coverage: the entity’s broader human-rights training programme typically includes anti-corruption / Code of Conduct content. Workpaper reconciliation across P1 and P5 training disclosures is a pre-engagement coordination win.
• Principle 9 — Customer Value (publishing in W5) overlaps with P1 on complaints: customer complaints related to ethics or transparency may surface in both P1 and P9 grievance-mechanism disclosures.
• Principle 8 — Inclusive Growth overlaps with P1 on CSR governance: the audit committee’s review of CSR activity feeds both the Section 135 CSR disclosure and the P1 governance narrative.

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Sector context

Sector	P1 emphasis
Banking, NBFCs, financial services	Anti-money-laundering, anti-bribery, insider-trading framework, large value of related-party transactions (group treasury, captive subsidiaries). The Openness Core KPI’s related-party components are typically the headline metric.
Pharma, healthcare	Anti-bribery on procurement (especially around hospital / institutional sales), anti-corruption due diligence on third-party agents, fines and regulatory notices from drug regulators
Public infrastructure, utilities	Anti-corruption in tendering and project execution, government-relations governance, fines from sector regulators
IT services, BPO, KPO	Data-handling integrity (overlaps with P9 customer privacy), anti-corruption on government contracts, conflicts of interest on key client engagements
Manufacturing, cement, steel	Procurement governance (vendor concentration through trading houses is the Openness Core KPI’s most material component), environmental-clearance compliance integrity, related-party transactions for raw-material sourcing
FMCG, retail	Channel concentration (sales to dealers / distributors is the Openness Core KPI’s most material component), trade-related disputes, related-party transactions in distribution arrangements

The sector-specific industry guides (in /industries/) cover the operational nuances per sector — those publish over Phase C Weeks 7-8.

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Common audit findings

Common practice patterns observed in BRSR engagements — not SEBI-recognised categories of finding:

1. Code of Conduct training coverage denominator basis. ”% of employees trained” can be calculated on average headcount during the year, year-end headcount, or eligible-for-training subset. The denominator basis should be disclosed alongside the figure.
2. Fines vs notices distinction. Some entities include regulatory notices in the fines disclosure (overstating); others exclude even imposed but unpaid penalties (understating). The disclosure should anchor on penalties imposed during the reporting year, with material pending matters separately narrativised.
3. Related-party scope mismatch with Ind AS 24 disclosures. The Openness Core KPI’s related-party components must reconcile to the entity’s Ind AS 24 financial-statement related-party disclosure; mismatches suggest definitional inconsistency that the assurance partner will surface.
4. Trading-house classification basis undisclosed. The Openness Core KPI’s purchases-from-trading-houses sub-metric requires the entity to apply a documented classification basis for which vendors count as “trading houses” (versus manufacturers, service providers, or other vendor types). The classification basis applied should be disclosed; this is an entity classification call rather than a statutory definition.
5. Refresher training vs initial training. Some entities count one-time induction-Code-of-Conduct training as ongoing coverage. The disclosure should distinguish initial onboarding training from periodic refresher training (typically annual).
6. Awareness-of-NGRBC-principles for leadership. The Essential indicator on leadership awareness of NGRBC principles is sometimes treated as a tick-box; the disclosure is more credible when it references specific board / committee training events during the year.

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How P1 rolls up into the BRSR Core engagement

P1 carries one BRSR Core KPI — Openness of Business — which the signed BRSR Core assurance report attests (across its prescribed sub-metrics) to reasonable assurance under SAE 3000 (Revised). Workpapers retained by the assurance partner cover the trading-house and dealer / distributor classification basis, the related-party-transaction reconciliation to the Ind AS 24 / §188 / LODR-23 records, the audit committee minutes, and the period-basis treatment of each sub-metric.

The remaining P1 disclosures (Essential indicators on training, conflicts of interest, fines, NGRBC awareness; all Leadership indicators) are filed as part of the BRSR but are NOT in the BRSR Core reasonable-assurance scope. Many entities ask the assurance partner to apply limited-assurance procedures over selected P1 items where lender ESG covenants reference them — common candidates: anti-corruption training coverage, fines and penalties disclosure, political contributions.

For the engagement that produces the signed BRSR Core assurance opinion, see BRSR Core Assurance. For SME suppliers being asked by their Top-1,000 listed customer to provide assured Code of Conduct training or anti-corruption data as part of the customer’s value-chain disclosure, see BRSR Value Chain Verification.

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Related reading

• Openness of Business — BRSR Core KPI — dedicated spoke page (publishing next)
• NGRBC Principle 3 — Wellbeing of Employees — sibling pillar, training overlap
• NGRBC Principle 5 — Human Rights — sibling pillar, training overlap
• NGRBC Principle 6 — Environment — sibling pillar
• NGRBC Principle 8 — Inclusive Growth — sibling pillar
• Document Evidence Requirements — full per-attribute evidence checklist
• NGRBC to BRSR Metric Mapping — full P1–P9 to BRSR-format metric crosswalk
• BRSR Core Assurance — service
• BRSR Value Chain Verification — service