ESG In India - “Legal Framework, Regulatory Challenges, And Global Convergence”
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ESG IN INDIA: “LEGAL FRAMEWORK, REGULATORY
CHALLENGES, AND GLOBAL CONVERGENCE” Soumya Prakash Hota, Birla Global University, Bhubaneswar Pratyusha Purohit, Birla Global University. Bhubaneswar
ABSTRACT
This article explore the terrain of India’s ESG regulation and interrogates whether the prevailing legal system secures meaningful accountability and transparency from firms. It maintains that ESG reporting is no fleeting trend, but instead provides structured, evidence-based insights into corporate longevity that lie beyond conventional balance-sheet figures. By tracing the trajectory of domestic ESG rule-making, the study demonstrates how globally accepted frameworks—PRI, GRI, TCFD—have quietly and significantly influenced local practice, most visibly through the SEBIenforced requirement of the Business Responsibility and Sustainability Report.
Introduction
ESG — which stands for Environmental, Social, and Governance — moves the focus from strict profit to. the larger responsibility that companies have in today’s world. It measures the way a company influences the planet, how it values and supports its workforce and society and how transparently it manages itsreducers. own operations. Current-day reporting is no longer bound by a ‘bottom line;’ companies now supplement the story behind their financial statements with complete, credible explanations in their. the score. Investors, regulators, and the public all want to see concrete evidence of a firm’s affect on ecosystems, on people, and on decision-making ethics. This discipline makes it easier for firms to demonstrate their sustainability intentions to a spectrum of audiences, from institutional financiers to everyday consumers and policymakers.
While some regard ESG as merely the latest ethical buzzword, it is clear from the quality of its requirements that it stands apart from, but learns from, earlier concepts. Sustainability speaks to the balanced stewardship of natural systems, advocating for long-term ecological and economic resilience. Corporate Social Responsibility (CSR) matured during the early 2000s to encompass wider ethical obligations, often expressed through donation and volunteerism to local causes. ESG takes the generous spirit of both ideas, formalizing them by insisting that firms quantify how their ecological and social footprints translate to risk— expected supplychain disruptions from climate change, or reputational fallout from lax data protection— enabling a direct link to cash flows and, ultimately, business valuation.
The shift from earlier, often retroactive and fragmented philanthropic efforts to a proactive, data-led ESG framework has reshaped the very notion of corporate responsibility1. The original EHS programs of the 1980s, set up to meet regulatory obligations regarding pollution and personnel safety, tended to react to rather than anticipate harm. The initiatives often served dual purposes: meeting liability and portraying companies in a favourable light. Where the distribution of this information had been uneven, trust erosion often led to outright “greenwashing,” glossing minor expenditures while resisting material change. ESG literati 1 Aditya Kalra, India to review ESG disclosures for listed firms, market regulator says, REUTERS (Apr. 16, 2025, 10:22 AM), https://www. reuters.
com/sustainability/boards-policy-regulation/india-review-esg-disclosureslistedfirms-market-regulator-says-2025-04-16/. asserted that resource stewardship and social stewardship are determinants of intrinsic value, not mere antithetical costs to be minimised. Subsequent shocks, particularly the COVID-19 disruption, showed that companies adhering to rigorous ESG disciplines weathered the storm with greater human and operational capital intact. The coupling of empirical outperformance in such periods with the insistence of institutional portfolios on systematic, verifiable, and Comparative benchmarks for non-financial measures have supplanted the once-accepted notion of ‘soft accountability’, which allowed companies to use imprecise or impenetrable narratives.
Updated regulatory frameworks mandate precise, speedy disclosures, particularly for sectors such as agriculture and other soft commodities. As a result, compliance units and controls specialists work side-by-side with revenue-generating teams, embedding ESG metrics into day-to-day strategic decision-making. Reporting on these metrics is no longer a peripheral exercise; it is a core domain that drives value creation and risk mitigation with the same intensity as financial forecasting. The Imperative of ESG in Modern Corporate Governance What started as an optional set of ESG pilot programs in many corporations has quickly evolved into an indispensable element of sound boardroom governance.
When firms commit to specific, and sustainable development) specific, time-bound ESG targets, but they also have access to a broader pool of sophisticated capital, pre-empt Accuracy and puncture the frame of reputational scrutiny to build real reputation one stakeholder at a time. The are increasingly showing that credible, well-implemented ESG practices do not return, on the other hand, they increase enterprise value, reduce risk profiles, and often translate into improved bottom-line performance. The capital markets have responded of sustainable firms environmentally responsible firms generally have narrower credit spreads and better investor loyalty. ESG has decisively matured beyond the legacy binary of altruism versus apathy; its principles are now widely recognised as a generator of superior financial outcomes.
Adopting a systematic ESG framework allows firms to penetrate new customer segments, drive operational efficiencies, minimise regulatory penalties, galvanise workforce morale, and attract relationship-driven risk capital. Programmes that illuminate product sustainability are now rewarded with higher price premiums, while innovations focused on waste minimisation and emissions controls have yielded double-digit improvements in margin. The social dimension of the agenda is equally consequential. Executives who intentionally weave ESG narratives into the fabric of corporate culture experience a measurable lift in employee enthusiasm, a marked contraction in voluntary turnover rates, and a consequential advantage in talent acquisition.
This is particularly palpable among Millennial and Generation Z cohorts, who sustain purchasing and employment preferences that privilege corporate identity alignment To put it plainly, ESG is not optional anymore—it's the lens through which sustained, longterm corporate prosperity is judged. Far from a passing fad, it has emerged as the strategic framework guiding valuables like stable balance sheets, transparent boardrooms, and reputational muscle. In the Indian context, ESG is shifting from a mere magnet for overseas capital to the catalyst for evolving domestic regulation. New market discipline is being sculpted, with the chisel often held by global capital that insists on superior stakeholder accountability. Purpose of the Report It attempts to find out whether these rules really make companies accountable and transparent.
The study analyzes the major laws and regulations, seeks to understand the implementation, evaluates the resulting corporate behavior, and compares the level of India’s compliance and reporting frameworks with the international standards. It concludes with constructive steps to improve the ESG framework in the country. ESG: International Background and Progression Concise Chronology and International Expansion The ESG framework moved into the corporate mainstream following the issuance of the 2004 U. N. document entitled "Who Cares Wins"2, which established a clear nexus between sustainability metrics and financial outcomes, thereby recasting sustainability from a moral question into a matter of capital relevance. The 2016 Paris accord, obliging signatories to stipulate aggressive net-zero targets, further broadened the global ESG agenda.
India subsequently announced a net-zero deadline of 2070, a long-range pledge designed to compel
2 KPMG, SEBI introduces certain key changes in BRSR reporting, KPMG.COM (Jan. 2025, ),
https://kpmg. com/in/en/insights/2025/01/firstnotes-sebi-introduces-certain-key-changes-in-brsr-reporting. html. domestic enterprises to formulate and operationalise detailed and rigorous ESG strategies5 The Role of International Frameworks A cohesive global ESG infrastructure has emerged in large part due to strategic international frameworks that set benchmarks6 for consistent and credible reporting. Among these, the PRI (Principles for Responsible Investment) stands out as a driving force, uniting global asset owners and managers around the mandate to embed ESG factors throughout the investment cycle. PRI signatories wholeheartedly back the need for unified, internationally accepted reporting norms, arguing that robust, harmonized disclosure elevates the integrity and comparability of data, thereby enabling sharper investment and stewardship decisions.
Complementing the asset-management sphere, the GRI (Global Reporting Initiative) delivers a widely recognised, modular suite of standards for organisations wishing to systematically disclose and analyse their sustainability performance. With rigorous definitions and performance metrics, GRI empowers companies to pinpoint, quantify and influence ESG risks and opportunities. The GRI labels are notably prevalent among India’s top-hundred companies, all of which leverage the standards to elevate their non-financial disclosures and convince cross-border investors of alignment with global governance expectations.
The climate disclosure landscape has gained precision through the TCFD (Task Force on Climate-related Financial Disclosures), which systematically guides companies in articulating Benchmark Gensuite, ESG Reporting in India: A Journey of Challenges and Learnings, their climate-related financial risks and opportunities in forward-looking and financially relevant terms. The architecture of the TCFD is particularly indispensable for industries with significant carbon footprints, and forward-leaning Indian leaders like Mahindra & Mahindra have applied the framework to formally elucidate climate governance, strategy, metrics and targets, thereby enhancing transparency on transition and physical risk.
The Influence on Indian Law and Corporate Practice Internationally accepted ESG standards are morphing from informal aspirations into the mandatory floor that firms must stand on to show they govern responsibly. For Indian corporates, this is a call to forge processes that are stringent, open, and irrefutably trustworthy. The home framework lines up with benchmark tools such as the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD), which simplifies cross-border validation for seasoned investors. That coherence also minimises redundant reporting burdens on global companies’ Indian arms while calming investor nerves surrounding transparency and long-term durability. The pool of asset managers scrutinising Indian equities has tripled, and these funds routinely reference such frameworks in their investment criteria.
SEBI, India’s market supervisor, is beginning to use the Business Responsibility and Sustainability Report, or BRSR3, to align the country’s public-facing companies with established international norms. It synthesises the Global Reporting Initiative and the TCFD to create disclosures that global investors and directors find usable, and that multinationals find less burdensome. More than the operational conveniences, the launch is a statement that India now puts a premium on openness and signals to domestic companies that reporting on sustainability is as much a question of local market discipline as of accessing offshore pools of capital. The data that companies provide will start to determine, rather than merely mirror, how exchanges and writing our own laws evolve.
Importantly, accountability for ESG—product and workplace emissions, supplier conduct, proxies for climate risk—isn’t packed into a single enactment, but is woven into several statutes. Environmental considerations are steered by the Environment Protection Act, workplace outcomes are layered on labour statutes and on the Company Act, while scope for enhancing transparency and conduct norms for directors, board practices, and transactions is conferred on the Companies Act and the stock exchanges. The approach may seem like a cadaver of lenses and shields, but the drift is cumulative: leaders find incentives to document water use, labour practices find minds to proved supplier ratios, and companies that now go data hungry will think twice about withholding the information the TCFD and GRI4 will find in three clicks.
India’s ESG regulation springs from a constellation of statutes and regulators, giving the landscape both breadth and complexity. At its core, the Environment Protection Act prescribes
3 Adsvita, Business Responsibility and Sustainability Reporting (BRSR), ADSVITA.COM (2023),
https://www.adsvita.com/business-responsibility-and-sustainability-reporting-brsr/.
4 Arpita Das, Emerging trends of environmental, social and governance disclosure, ENVTL. &
SUSTAINABILITY INDICATORS, Vol. 22 (2024), https://www. sciencedirect. com/science/article/pii/S2666791624000253. the framework for ecological disclosures. Related provisions under the Companies Act, as well as specific stock exchange listing norms, overlay governance requirements. On the social front, a patchwork of fifteen separate labour statutes, complemented by voluntary codes and guidelines driven by the corporate sector and industry bodies, rounds out the picture. This multi-channel architecture generates a compliance framework that is robust by construction yet occasionally lacks the cohesion regulators and participants assert it supplies, leading to overlaps, ambiguities, and compliance duplication for some firms.
The coexistence of statutes administered by agencies including the Environment Ministry, the Labour Ministry, the SEBI, the Reserve Bank, and the Ministry of Corporate Affairs yields competing and sometimes converging norms, producing multiple yet interlinked levels of responsibility among corporates5. The Companies Act of 2013, under the Ministry of Corporate Affairs, mandates that companies allocate at least 2% of their average net profit toward corporate social responsibility (CSR). This obligatory spending and disclosure supports a wide range of environmental and social projects. The Environmental Protection Act of 1986 grants the Ministry of Environment, Forest and Climate Change the authority to regulate, prevent, and control pollution.
The Act establishes a baseline for Environmental Impact Assessment processes, allows the Central Government to set acceptable standards, and empowers them to impose penalties for any violations. The Securities and Exchange Board of India (SEBI), through the Listing Obligations and Disclosure Requirements (LODR) Regulations framed in 2015, structures the country’s corporate governance architecture. The regulations compel every listed company to furnish exhaustive disclosures, not only concerning its board composition and the pay scales of top management, but also its risk management frameworks, thereby reinforcing the pillars of transparency and accountability that investors and other stakeholders rightfully demand. The statutory framework is clear: governance is a process of information, and the duty to share that information binding.
The POSH Act of 2013, regulated by the Ministry of Women and Child Development, was
5 Rahul Mehta, Evaluating India’s ESG Regulatory Framework, AMICUS CURIAE (2024),
https://journals. sas. ac. uk/amicus/article/view/5795. created to guarantee that every workplace in India remains safe and equitable. Central to the Act is the requirement that every organisation, no matter its size, form a Internal Complaints Committee whenever it has 10 or more staff. This body is entrusted with investigating allegations of sexual harassment, guiding the mediation process, and ensuring that the complainant and all witnesses are shielded from retaliation. The legislation affirms that dignity on the job is not a concession whether from management or colleagues, but an entitlement that all employees possess. The Minimum Wages Act, originated in 1948 and enforced by the Ministry of Labour and Employment, serves to prevent the exploitation of workers through starvation wages.
It prescribes a non-negotiable floor of earning that employers must honour, so that no worker is forced to survive on an income that leaves basic daily needs unmet. The statute acknowledges the inherent value of every hour of work and insists that remuneration keep pace with the cost of living, respect for persons, not simply compliance with the letter of the law. Environmental Regulation Across India, a dense web of legislation underpins the “E” (Environment) component of ESG by integrating statutes on air, water, waste, forests, and biodiversity. These statutes complement one another, offering layered safeguards that balance ecological integrity with the rights of communities and the imperatives of economic development, steering the nation toward a netpositive ecological footprint.
A pillar of India’s contemporary regulatory framework is The Companies Act, 2013, whose Section 135 obliges qualifying firms—those with a net worth of ₹500 crore, annual revenue of ₹1,000 crore, or a net profit of ₹5 crore in any financial year—to channel a minimum of 2% of their average net profit into specified Corporate Social Responsibility (CSR) initiatives. The law explicitly enumerates permissible CSR activities, among which stand out measures aimed at environmental conservation, sustainable resource management, and effective waste minimization. Section 135 of the Companies Act is themselves bolstered by the command authority of the
1986 Environmental Protection Act, which stands at the summit of India’s legislative
framework for environmental governance. This statute confers the Central Government wideranging authority to institute and operationalise a cohesive regime of national environmental protections, to stipulate ambient quality standards, and to impose functional limitations on enterprises within designated ecologically fragile areas. An essential framework mechanism is the continued embodiment of the Environmental Impact Assessment Notification, which mandates prior environmental clearance for specified classes of project activities.
This EIA system is structured into four sequenced, interrelated phases: screening to determine the regulatory blanket, scoping to identify and clarify the principal environmental concerns, public consultation to integrate stakeholder views, and appraisal to certify that environmental considerations are embedded in the refined project design, thus obsequiously interlacing sustainability into the architecture of the undertaking before any ground is disturbed or commitment is incurred. In addition to overarching environmental statutes, India has adopted sector-specific directives to ensure compliance without hindering strategic imperatives. For example, to accelerate exploration of critical minerals, the Ministry of Environment has established a dedicated track within the ‘Parivesh 2. 0’ digital clearance platform.
Though the procedural timelines are compressed, the government has cautioned that all approvals remain subordinate to the immutable provisions of the 1980 Forest Conservation Act and the standing Environment Impact Assessment regulations. A parallel regulatory sharpening is evident in the energy arena, where the 500 gigawatt non-fossil target for 2030 and the 2070 net-zero pledge are serving as catalysts for a redesigned policy architecture that is channeling investment into diverse renewable technologies, hydrogen, and grid compliance projects. Social By design, the Labour, Social, and Governance (ESG) programme6 is fortified in India by a dense statute of social provisions and labour protections.
The Minimum Wages Act of 1948 establishes a floor under pay that varies with the cost of living in each industrial region, shielding workers in the formal and informal economies from wage devaluation. When complemented by the 2013 Prevention of Sexual Harassment at Work (POSH) Act, which mandates the formation of Internal Complaints Committees in any establishment with a workforce of ten or more, the legislation widens its protective net. These committees, composed of an equal balance of women and men, investigate sexual harassment allegations
6 Akash Jain, ESG Integration Challenges in India
Beyond CSR, SSRN (2024), https://papers. ssrn. com/sol3/Delivery. cfm/5046202. pdf? abstractid=5046202&mirid=1. within a 90-day window, helping to reinforce a workplace culture of dignity and equal opportunity. When applied together, the statutes thus bolster economic security while also safeguarding physical and psychological integrity, ensuring that the workforce remains diverse, resilient, and fully engaged. The social pillar is in some sense growing into the Companies Act, 2013 in a compulsory CSR an accountability construct of the corporate law. This instruments compels Companies to allocate a certain proportion of the net profit to social development, public welfare, and educational initiatives. This provision of law turns an act of voluntary philanthropy into an enforceable obligation, requiring each covered entity to promote the public interest.
” In respectively and, as of 2018, also the same social due diligence obligations to their supply chain as it is in their own operations, an expectation that is becoming more and more prevalent, in particular in the emerging (and other similar countries) using relatively unprotected labor markets. The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is the dominant regulatory force impacting “Governance”, the last pillar of the framework. Obligations and Disclosure Requirements) Regulations 2015 (LODR7). They are one of the primary means for governance based disclosures and also set out the governance framework of listed entities. Learn Key requirements include the public disclosure of board and committee compositions, executive pay terms and the firm’s risk oversight practices.
By contrast, the Indian corporate governance model gives paramount importance to the Independent Director’s function. Under the statutory guidelines of the Companies Act, the presence of independent board members is no longer discretionary but an essential safeguard of corporate integrity and public trust. Acting as non-executive overseers, these directors introduce impartial judgment, contain actual or potential conflicts of interest, and uphold the rights of minority and non-controlling stakeholders. Their remit encompasses the validation of executive decision-making, oversight of the integrity of the financial accounts, and assurance of legal and regulatory compliance, all of which serve to align the firm’s strategic objectives with the patience and security of sustainable, long-term value.
The co-ordinated architecture of ESG oversight—where the MCA oversees CSR compliance, SEBI directs governance disclosures, and the NGT is empowered to levy environmental
7 EcoVadis, India – Business Responsibility and Sustainability Reporting (BRSR), ECOVADIS.COM (Mar.
2024, 2:30 PM), https://ecovadis. com/regulations/india-business-responsibility-and-sustainability-reportingbrsr/. fines—establishes an operational mosaic of accountability. Each agency acts as a guardian of a distinct sphere, mitigating the risk of the entire apparatus collapsing upon a single failure. For example, compliance with the CSR outlay does not provide immunity from the NGT’s swift sanctions should a chemical leak cause widespread harm. Thus, while no single, harmonised code exists, the inter-agency overlap deters compartmentalised negligence and builds cumulative defence around the corporate sphere. SEBI’s BRSR Mandate: A Deep Dive The rollout of the Business Responsibility and Sustainability Report (BRSR) in 2021 by SEBI embodies a stepwise advance toward systemic maturity8 in corporate sustainability disclosure.
Designed to supersede the erstwhile Business Responsibility Report (BRR), the BRSR solicited structured, measurable, and uniformly granular evidence, correcting the BRR’s condition of ad-hoc and often vague declarations. Data submitted under a collection of non-binding, discretionary best practices yielded divergent framing—thereby compromising the ability of stakeholders to gauge corporate performance within a common yardstick. Recognising this susceptibility to ambiguity, SEBI calibrates the disclosure regime toward disciplined reporting, enabling stakeholders to attain apples-to-apples comparability across the national listed landscape. The BRSR mandate meets this need by offering a clear, unified system that is both in line with the National Guidelines on Responsible Business Conduct (NGRBC Principles) and the UN Sustainable Development Goals (SDGs)9.
This move aims to harmonize reporting, sharpen corporate transparency, and equip stakeholders with simple, comparable data. Applicability, Structure, and Key Parameters The BRSR mandate targets the one thousand largest listed companies by market capitalisation
8 Corpseed, ESG Regulatory Landscape in India 2025
BRSR & BRSR Core Compliance Guide, CORPSEED.COM (2025), https://www.corpseed.com/knowledge-centre/esg-regulatory-landscape-inindia2025-sebi-brsr-brsr-core-compliance-guide-for-companies.
9 SG Analytics, Collaboration between BRSR and ISSB could resolve ESG inconsistency issues,
SGANALYTICS.COM (2024), https://www.sganalytics.com/media-coverage/collaboration-between-brsrandissb-would-resolve-various-issues-related-to-inconsistency-in-esg-reporting/. in India10, thereby encompassing the country’s most significant and highprofile firms. Its tiered framework divides disclosures into two groups: “essential,” which firms must provide, and “leadership,” which is optional and aspirational. This staggered design lets companies progressively strengthen their reporting practices. To enhance the depth of the disclosures, SEBI has rolled out a refined segment, BRSR Core, that insists on reporting nine pivot performance indicators11, among them greenhouse gas emissions, water consumption, and energy use. From the fiscal year 2024–25, the country’s
250 largest listed firms must secure “reasonable assurance” on their BRSR Core data,
embedding a deeper requirement for validated and credible reporting. which referenced several international standards implicitly through guidance notes, the BRSR adopts a direct, point-bypoint mapping with the GRI’s Universal and Topic standards, and with the TCFD’s Recommendations. By embedding these internationally recognised benchmarks into the core disclosure template, the regulator reduces the risk of divergent local interpretations and sets a baseline that can be readily triangulated by financial analysts, asset owners, and other stakeholders operating across multiple jurisdictions. Consequentially, the BRSR does not function merely as a sovereign report card; it becomes a recognised node within the global ecosystem of corporate responsibility. Implementing the BRSR mandate is undeniably important, yet it carries some challenges.
For most Indian companies, the leap from voluntary, non-reporting stipulations, to data-driven reporting frameworks is quite the undertaking. One of the most significant challenges is the absence of reliable information, particularly, across elaborate supply chains. The transition from average values to measured values involves actual data management systems and processes and is expensive and laborious. One large concern pertaining to the compliance with ESG is the “look good” compliance, which is when companies tick the boxes which following the metrics but do not make behavioral changes, which is termed as the case with greenwashing. This is to an extent the case where some disclosures are optional and do not have to undergo verification. In this light, companies cherry-pick the information they choose to dispense, omitting the information that may portray them unfavorably.
Put simply, it is window dressing sustainability without concern
10 JLLRD Editorial Board, Analyzing the Evolving ESG Regulations in India (2024), JLLRD.COM,
https://www.jllrd.com/index.php/journal/article/view/23.
11 ET Legal Bureau, SEBI includes Green Credit Program under BRSR framework, ECON. TIMES LEGAL
WORLD, Jan. 25, 2025, at 7, https://legal. economictimes. indiatimes. com/news/regulators/sebi-includesgreencredit-program-under-brsr-framework/119666514. for whether the behavior matches the claim. To combat this, SEBI has rolled out a phased12 strategy for the top 1,000 companies. In the first instance, it is only 250 that are required to make disclosures with the greater levels of verification. This is rational for the stepwise approach as it is accepted that larger companies are in a better position to manage the sophistication of contemporary ESG reporting, while smaller companies may take longer. Through the BRSR Core, it is SEBI which gains the most strength in requested disclosures with some degree of verification, thus more compelling SEBI’s position in accountability to check the degree of compliance.
Judicial and Regulatory Evolution Circulars and Enforcement Actions of SEBI Under this regulation, all ERPs are required to register with SEBI and are subsequently mandated to provide the rating methodology used for ESG, which is a worrying gap in the market for the reliability and transparency of the rating. SEBI’s strategy to control the raters is to protect the data streams that are used for investment decision-making and the repute for which the data is generated. Accountability The Indian judiciary is known to have set a very high standard for environmental accountability of corporations. The seminal case of M. C. Mehta v. Union of India (1987)13 provides a very important foundation to environmental in law. The Supreme court in this case formulated the principle of Absolute Liability.
It held that a company in a serious or dangerous undertaking is liable for every harm, irrespective of the precautions taken to avoid harm, and the company will not be able to defend itself. It is a principle that the English common law rule of strict liability will have to be used, and even greater, in public to protect the environment, it is a bigger burden on corporations.
12 KnowESG Editorial Team, All Bark No Bite
India’s Battle with Greenwashing, KNOWESG.COM (Mar. 30, 2025), https://www.knowesg.com/featured-article/all-bark-no-bite-indias-battle-with-greenwashing-30032025.
13 M.C. Mehta v. Union of India (1987) SCC(1) 395
The Role of the National Green Tribunal (NGT) The National Green Tribunal (NGT) established in the year 2010, is a body set up in the Indian legal system for the exclusive purpose of instituting and hearing cases on the environment. The NGT is not, like other courts, constrained by the procedural rules set in the Civil Procedure Code. Such freedom allows it to apply foundational principles of environmental law like ‘the Polluter Pays’ and ‘the Precautionary Principles’ in order to dispense justice. RBI’s Role in Green Finance The Reserve Bank of India is advancing efforts to embed climate and ESG metrics into every layer of the financial system the central bank supervises. Recently the authority released a draft disclosure framework compelling regulated entities to publish detailed assessments of climaterelated financial risks and opportunities.
Harmonised with the EU’s Corporate Sustainability Reporting Directive and the SEC’s upcoming standards, the framework centres on four mandatory pillars—governance, strategy, risk management, and metrics. Such a structured requirement is intended to fortify the financial system against the growing, systemic impact of climate change. Concurrently, the approval of sovereign green bonds as qualifying assets under the statutory liquidity ratio stands as a tactical measure to amplify their market absorption, illustrating a deliberate redirection of central bank liquidity facilities toward green financing. Together, these interlinked actions constitute a cohesive, guided policy canvas in which the RBI, SEBI, and contiguous market regulators govern not only the disclosures of corporations but also the underlying financial instruments and ecosystem behaviour.
The calibrated and synchronized regulators’ stance signals a further maturation of India’s ESG infrastructure. Challenges in ESG Implementation in India Absence of Codified, Enforceable Legislation In India, one of the most pervasive obstacles to effective ESG stewardship remains the absence of a comprehensive, consolidated law. Rather than a singular code, the landscape consists of disparate provisions scattered across the Companies Act, SEBI guidelines, and directives from the National Green Tribunal, among others. Such a hybrid architecture cultivates compliance ambiguities and forces organizations to craft piecemeal14 datamanagement and reporting
14 A. Das, The ESG Regulatory Framework in India
An Analytical Perspective, ATLANTIS PRESS (2024), https://www. atlantis-press. com/article/126000701. pdf. frameworks. This deficiency of cohesive statutory backbone breeds a segmented architecture lacking coherent enforcement leverage, thereby muddying the entire compliance ecosystem. Window-Dressing without Substance The problem of window-dressing—where firms inflate the perceived substance of environmental measures—persists15 as a substantial threat to credible ESG progress. Uniform reporting templates across firms are still an aspiration; consequently, companies dodge scrutiny by adopting disparate formats that mislead. Compulsory third-party validation of publicly disclosed statistics remains discretionary for most issuers, further entrenching superficial compliance.
Equally vexing is the persistent scarcity of verified, granular ESG data, which constricts market actors’ capacity to cross-check asserted achievements, thereby permitting organisations to masquerade cosmetic compliance as systemic change. Limited Awareness in Mid-Cap and Unlisted Companies At present, India’s BRSR requirement covers only the nation’s top 1,000 publicly traded firms, sidelining the sizable mid-cap and unlisted sectors. This gap in regulation leaves CSR knowledge and ESG practice shallow outside large blue-chip players, stunting sector-wide momentum. Smaller firms often cannot afford the specialist teams, governance structures, and digital systems the largest corporates have already built, inhibiting even incremental integration of environment, social, and governance issues into core strategy.
Unless knowledge programs, capacity grants, and pragmatic frameworks extend beyond the Nifty 50, ESG, in practice, will remain a box-ticking exercise in boardrooms rather than a transformative force in operating corridors. Data Reliability and Audit of ESG Metrics Obtaining credible, verifiable ESG metrics presents an enormous acute test for the Indian firm. Companies seeking the transition from simplified "mechanical" averages to real, transactionor scientifically measured values meet methodological and staffing gaps at every turn. Even a single questionable, or missing, data point erodes a report’s truth and catalyzes stakeholder cynicism. Lacking a legally entrenched requirement for compulsory audits of sustainability
15 Ritika Sharma, Greenwashing and ESG Compliance in India
Legal Accountability for Misleading Sustainability Claims, RECORDOF LAW. IN (Feb. 2025), https:// disclosures, many firms report unchecked, reinforcing the perception that output curves alloy expediency with unreliable methodology. Until regulators mandate strictly competent, publicly published audit trails, the space will reflect more corporate aspiration than corporate accountability. Comparative View India’s ESG Regime vs. EU and USA India’s ESG legislative architecture is gaining traction, yet it diverges markedly from the welldeveloped doctrines imposed by the EU and the USA. The EU pursues harmonised and prescriptive EU-wide regulatory mandates—think SFDR, proposed CSRD and EBA, and Taxonomy Acts—privacy thresholds, reporting, and climate KPIs, dictating scope and governance thresholds for listed and unlisted entities globally, including for India respondents.
Conversely, the USA’s fragmented yet powerful approach—rooted largely in the SEC’s drive for climate disclosures, proposed SEC rules, and the Biden administration’s SEC climate agenda—is advanced for the largest and most extensive asset classes, including multinational parent firms in the upstream and ledger nodes. Conversely, India is accelerating, leveraging the Companies Act and recently UNIX, CIF35 and BRSR directives to effect an “integrated” regulatory narrative, accentuating harmonised board and risk, human capital, manufacturing, and climate intensity reporting. Still, the Indian system remains circumscribed: ESG applicability is tethered to asset thresholds and to a limited set of sectors, while episodic corporate governance disclosures impair crossparametric consistency.
Moreover, India’s regulatory architecture, still under iterative development, is debating alignment across parallel, inconsistent, and enforcement trajectories. By contrast, EU Member States now confront strategic deployment dilemmas between in-port and out-port investment approaches. Related preambles and SEC advisory opinions caution that no optional preparatory actions should prompt binding corporate behaviour pending crystallisation of the definitive regime, to be watched across applicable stakeholder fora. The EU’s Corporate Sustainability Reporting Directive (CSRD) carves its singular position by its expansive dual materiality mandate, insisting that organisations quantify not only the financial significance of disclosures but also the reciprocal social and environmental impacts which corporate actions may inflict.
Additionally, the EU Corporate Sustainability Due Diligence Directive obliges all companies—whether they manufacture goods or simply sell them to EU markets—to take specific steps to identify, prevent, or mitigate human rights abuses and environmental damage throughout their supply chains. By contrast, the comparable U. S. regulatory landscape, which is evolving, continues to emphasize climate disclosures that are primarily geared toward informing investor analysis. The BRSR framework marks a key milestone for Indian governance, introduced by SEBI to the 1,000 largest listed corporations. By mandating public disclosure against each of the NGRBC's nine foundational principles, it compels boards to shift the governance lens irrevocably away from narrowly-defined financial inputs.
ESG, ethics, and holistic impact are now deciding fields; data regarding climate, human rights, corruption safeguards, and stakeholder engagement must be shared and scrutinised. Metrics like return on equity no longer paint the entire picture—executives are now accountable for delivering a credible, long-term account of responsible value products. Seen from another vantage, the EU’s Corporate Sustainability Reporting Directive is a more comprehensive edict, directed toward any large company with operative links in the Union. Whether the shareholders are in Brussels or the company is listed elsewhere, the rulebook is binding. Firms are required to trace their ecological, social, and governance footprints wherever value is created, stretching from extraction to final consumption.
“Double materiality” anchors the obligation in recursive thinking, demanding that the board tracks, and accounts for, how corporate choices modify a social or environmental reality in parallel with how these realities influence corporate performance. As part of its regulatory oversight, the Securities and Exchange Commission has newlyadopted Rules and Guidance aimed exclusively at insulating investors from climate-related financial uncertainty by compelling registrants to disclose the monetary effects of climate events and climate remediation plans. The SEC purposely narrows its focus to climate matters, differentiating itself from the broader, multi-variable ESG frameworks by moving beyond disclosure of policies to disclosure of material effects.
Core directives mandate registrant evaluation and disclosure of material direct and financed greenhouse gas sources, material impacts that any registrant anticipates arising from severe weather and weather-adjacent hazards, and any active legal, capital, or operational plans that the registrant has adopted or plans to adopt to comply with any existing and pending climate remediation policies. Standardized climate reports will make evaluating a business’s risks and opportunities simpler while assisting investors and lenders. In turn, this eliminates possible ambiguities that might affect decisions concerning loans, mergers, or equity acquisition.
Lessons from Global ESG Mandates For instance, the EU’s Corporate Sustainability Reporting Directive (CSRD) is a powerful piece of legislation that transcends the boundaries of the EU and encompasses large non-EU companies that do substantial business in Europe. This means Indian companies that operate in the EU region must conform to its stringent provisions. Fragmentation still defines the domestic ESG roadmap. To remedy this, we need one cohesive statute that replaces the current patchwork of rules, cutting through the mosaic confusion facing lawyers and chief compliance officers alike. Such legislation would harmonize sectoral obligations into a coherent whole by distilling updated global standards and recalibrating them for local conditions.
Think of a framework that centralizes binding benchmarks aligned with SFDR KPIs, mandates plain-language TCFD risk disclosures, and prescribes uniform genderpay disclosures all organised around a single reference text. One statute, one portal, one single code for every obligation. Mandatory Independent ESG Audits To eliminate the risks of unreliable data and greenwashing, we must introduce mandatory independent audits of ESG disclosures. Only a neutral, third-party review of core metrics, particularly scope-1 and scope-2 emissions and water draw, can deliver the credibility stakeholders require. Mandatory verification creates dual pressure: it raises the minimum level of trust associated with corporate ESG reports and compels firms to install rigorous internal controls, data governance, and systems capable of withstanding independent scrutiny.
Mandatory ESG Education for Boards and Compliance Teams ESG rollout remains uneven, especially among mid-sized and private firms, due largely to insufficient understanding of the requirements. To overcome this barrier, governance, and compliance personnel at all tier-2 and tier-3 listed firms must undergo ongoing ESG competency programmes. Such training will ensure that directors and governance officers grasp the strategic, regulatory, and reputational dimensions of ESG, enabling them to weave sustainability objectives into every key decision and cultivate a durable, top-to-bottom culture of accountability. Conclusion India’s path to a comprehensive and transparent ESG framework remains ongoing, yet the progress is evident, particularly with the recent adoption of the BRSR requirement.
Our examination reveals that a well-articulated legal and regulatory scaffold does not stifle corporate dynamism but acts as the very underpinning for enduring collective and economic benefit. Institutions such as SEBI, the RBI, and the NGT are constructing a tiered accountability architecture that nudges firms away from tokenism toward consequential, deeply embedded reform. In India with respect to Environmental, Social, and Corporate Governance (ESG) principles, dedicated legal principles such as Absolute Liability and those upheld by the NGT ensure that commitments to ESG are not mere platitudes, but legal obligations.