Laws in every country aims to promote ethical business practices and ensure corporate accountability. Similarly, to seek accountability from Indian businesses regulatory bodies have introduced compliance mechanisms, reporting standards, each defined by their own economic, social, and political arena. Environmental, social and governance (ESG) compliance is a structured framework that directs companies to adopt sustainable practices that are consonance with Sustainable development goals, 2015 and Paris agreement, 2016.

In India, the three pillars being integrated into corporate strategy businesses are environmental, social and governance that guides matters like climate change impact, greenhouse gas emissions, human rights, labor standards, transparency and anti-corruption. Companies with stronger ESG profiles have long- term resilience, lower regulatory risk and high investor appeal.

A report by the world bank and UN global compact titled Who Cares Wins recommends that companies should take leadership roles by implementing environmental, social and corporate governance principles and policies and to provide information and reports on related performance in a more consistent and standardized format. They should identify and communicate key challenges and value drivers and prioritize environmental, social and governance issues accordingly.[i]

Why ESG matters in country like India

The ESG criteria evaluates how public companies uphold environmental responsibility, contribute positively to their communities and maintain high standards of management and corporate governance. Depending on that Global investors allocate capital to companies with strong ESG and therefore, Indian Businesses need to align with these criteria.

The regulators in India such as Securities and exchange board of India mandates compliance of ESG. In 2012, SEBI introduced requirement of ESG reporting. It was termed as business responsibility report, SEBI mandated that the top 100 listed companies in India by market capitalization needed to file BRR. However, an IICA-UNICEF study exposed the gaps in the SEBI-BRR framework leading to formulation of Business responsibility and sustainability reporting (BRSR). It is a comprehensive ESG reporting framework that reports non-financial performance with enhanced transparency.

Corporate social responsibility (CSR) under section 135

Corporate social responsibility implies a concept, whereby companies voluntarily contribute to society beyond making of profits, that benefits the people of society in ethical and philanthropic manner. CSR obligates the businesses to measure their impact on people and planet rather than focusing on just profit maximization and financial performance.

Section 135 of Companies Act, 2013 requires eligible companies to spend at least 2% of their average net profits on certain social and environmental activities in a responsible and sustainable way. Therefore, CSR is designed as a self-regulating business model that helps companies to be socially and ethically accountable to itself.

Indian laws do not provide for any codified law governing ESG, rather the governance framework work through a mix of statutory corporate responsibility obligations, compulsory disclosure requirements and the gradual integration of ESG by the Indian businesses.

Review of non-financial data

In the context of ESG (Environmental, Social, and Governance) compliance in India, reviewing non-financial data has become a crucial aspect of assessing a company’s overall performance and sustainability practices. Non-financial data—covering areas such as environmental impact, labor standards, diversity and inclusion, corporate ethics, and stakeholder engagement—provides a deeper understanding of a company’s long-term value creation beyond traditional financial metrics.

Under SEBI’s Business Responsibility and Sustainability Reporting (BRSR) framework, listed entities are now required to disclose structured non-financial information, ensuring transparency and accountability in ESG practices. Reviewing this data helps identify potential risks, compliance gaps, and areas for improvement in sustainability strategy. For investors and regulators, such reviews enable informed decision-making, while for businesses, they enhance trust, reputation, and competitiveness in a market increasingly driven by responsible investment trends.

SEBI on ESG reporting in India

In recent years, Environmental, Social, and Governance (ESG) standards have transformed from voluntary ideals into measurable, enforceable corporate responsibilities. Globally, investors, regulators, and consumers are demanding transparency, accountability, and sustainability from businesses. In India, the Securities and Exchange Board of India (SEBI) has taken the lead in embedding ESG principles into the corporate framework ensuring that listed companies disclose, measure, and act on their environmental and social impact.

From mandatory sustainability disclosures to regulation of ESG ratings and bonds, SEBI’s initiatives are positioning India’s capital markets on the global sustainability map. It has reinforced section134 (3) of the Companies Act, 2013, also, the LODR regulations require listed companies under regulation 30(1) of the LDOR to make disclosures of information or events that are material in nature.

SEBI first introduced the Business Responsibility Report (BRR) in 2012 for the top 100 listed entities, requiring companies to disclose their social and environmental initiatives in alignment with the National Voluntary Guidelines (NVGs) on social, environmental and economic responsibilities of businesses.

In May 2021, SEBI replaced BRR with the Business Responsibility and Sustainability Report (BRSR) , a more comprehensive framework that integrates ESG disclosures with financial reporting. From FY 2022–23, BRSR became mandatory for the top 1,000 listed companies by market capitalization. It provides standardized indicators on:

·      Environmental metrics like carbon emissions, water usage, and waste management.

·      Social factors such as employee welfare, diversity, and community development.

·      Governance practices, board structure, and compliance ethics.

Structure and format of BRSR

The principal purpose of this reporting framework is to serve as an internal tool for businesses intending to align themselves with the NGRBC. The reporting structure is divided into three sections:

Section A- General Disclosures: The purpose of this section is to collect essential information about the listed entity, including details of its products and services, business operations, workforce, transparency and disclosure practices, regulatory compliances, and information related to subsidiary companies, holding entities, and joint ventures.

Section B- Management and process disclosures: In this section, the company must disclose details of its policies and processes aligned with the NGRBC principles, specifically focusing on leadership, governance, and stakeholder engagement. Where applicable, companies are also required to provide website links to publicly available policies. The information sought primarily covers aspects of oversight, governance structure, leadership practices, and management processes.

Section C- Principle-wise performance disclosures: This section is designed to enable businesses to showcase their performance in integrating the NGRBC Principles and Core Elements into their key processes and decision-making. The required information is divided into two categories - “Essential” and “Leadership.” The Essential level represents the baseline expectations for all businesses adopting these Guidelines, while the Leadership level reflects the practices of companies striving to achieve higher standards of social, environmental, and ethical responsibility.

National Guidelines on Responsible Business Conduct (NGRBC) – 2019

The National Guidelines on Responsible Business Conduct (NGRBC), introduced by the Ministry of Corporate Affairs (MCA) in 2019, serve as India’s foundational framework for responsible and sustainable business practices. These guidelines outline how businesses should function ethically, respect human rights, protect the environment, and contribute positively to society aligning closely with global Environmental, Social, and Governance (ESG) principles.

The Nine Principles of NGRBC

At the heart of the NGRBC are nine core principles that encourage companies to integrate responsible conduct into every aspect of their operations and decision-making:

1.    Ethics, Transparency, and Accountability – Operate with integrity, accountability, and transparency in all business dealings.

2.    Sustainability of Products and Services – Ensure goods and services contribute to sustainable development throughout their life cycle.

3.    Employee Well-being – Promote fair treatment, safety, and well-being of all employees across the value chain.

4.    Stakeholder Engagement – Be responsive to the needs of stakeholders, especially those who are disadvantaged or vulnerable.

5.    Human Rights – Respect and uphold human rights in all operations and relationships.

6.    Environmental Protection – Take proactive steps to protect and restore the environment.

7.    Public Policy Advocacy – Engage responsibly and transparently in public policy and regulatory advocacy.

8.    Inclusive Growth – Support inclusive growth and equitable development in society.

9.    Customer Value – Provide value to customers in a responsible, fair, and ethical manner

While ESG (Environmental, Social, and Governance) is a global concept used to assess corporate sustainability, NGRBC localizes ESG principles within the Indian context.

·      Environmental aspects are reflected in Principles 2 and 6 (sustainable products, environmental protection).

·      Social aspects are embedded in Principles 3, 4, 5, and 8 (employee welfare, stakeholder engagement, human rights, inclusivity).

·      Governance elements are emphasized in Principles 1, 7, and 9 (ethical conduct, policy advocacy, and fair customer practices).

Thus, NGRBC acts as India’s version of ESG standards, guiding businesses toward holistic sustainability rather than mere compliance.

The BRSR Core framework

The BRSR Core framework represents a significant evolution in ESG reporting in India, introduced by the Securities and Exchange Board of India (SEBI) in July 2023 as a subset of the broader Business Responsibility and Sustainability Reporting (BRSR) regime. It focuses on a distilled set of Key Performance Indicators (KPIs) across nine core ESG attributes such as greenhouse gas emissions, water & energy footprints, circularity, inclusive growth, and employee well-being with the aim of improving comparability, transparency, and assurance of sustainability disclosures.

With a phased rollout beginning with India’s top listed companies and moving towards broader applicability, this framework signals the growing recognition that sustainable business practices are not just optional but critical for credibility, investor confidence and long-term value creation.

ESG related laws and policies in India

On the environmental front, several key legislations govern ESG compliance. The Environment (Protection) Act, 1986 serves as the umbrella legislation, while the Air (Prevention and Control of Pollution) Act, 1981 and the Water (Prevention and Control of Pollution) Act, 1974 regulate air and water pollution respectively, requiring industries to adhere to strict environmental standards. The Energy Conservation Act, 2001 promotes efficient energy use, and the Plastic Waste Management Rules, 2016 including the Extended Producer Responsibility (EPR) regulations impose obligations on producers, importers, and brand owners to ensure environmentally sound management of plastic waste. Complementing these are the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, and the E-Waste Management Rules, 2016, which focus on responsible waste disposal.

Additionally, the Reserve Bank of India (RBI) has issued guidelines on sustainable finance, urging banks and financial institutions to incorporate ESG risk factors into their decision-making processes. With India’s commitment to achieving Net Zero emissions by 2070 and initiatives such as the National Action Plan on Climate Change (NAPCC), ESG compliance is becoming a cornerstone of corporate governance and sustainable growth in the country. Together, these laws and policies create a comprehensive legal ecosystem aimed at balancing economic development with environmental stewardship and social responsibility.

Challenges in implementing ESG for Indian Businesses

While environmental, social, and governance (ESG) frameworks are becoming essential for sustainable business practices and investor’s confidence, many of such businesses face significant challenges in transitioning ESG commitments into measurable action.

The implementation of ESG faces acute greenwashing and assurance deficits under SEBI’s BRSR Core which are not aligned with global benchmarks. There is lack of uniform method of accreditation for assurance providers. Another challenge that Indian businesses face is relating to cost of implementation which raises the cost of solar installation and treatment plants.

Unlike EU, India does not have sector specific taxonomies for green and sustainable activities. Also, when it comes to Enforcement of ESG disclosure, it is very weak in comparison to the standard framework of SEBI’s BRSR.

Conclusion

The transition from the Business Responsibility Report (BRR) to the Business Responsibility and Sustainability Report (BRSR) represents a significant move toward strengthening corporate transparency and accountability in India. This development underscores the growing importance of non-financial performance reporting, especially in the area of sustainability. The BRSR framework seeks to:

·      Encourage companies to embed ESG (Environmental, Social, and Governance) principles within their core operations and decision-making processes.

·      Provide stakeholders with consistent, credible, and comparable sustainability information to enable informed assessments.

·      Foster responsible investment practices by integrating both financial and non-financial factors into corporate evaluations.

By adopting the BRSR framework, Indian companies can enhance their sustainability performance, align with global ESG standards, and contribute to a more transparent and responsible business ecosystem. Companies struggle when it comes to implementation of ESG frameworks, however, despite the challenges there is a huge scope of strengthening regulatory frameworks by introducing a more comprehensive and standardized reporting framework.

Frequently asked questions (FAQs)

1.    What does ESG mean?

ESG stands for Environmental, Social, and Governance, the three key pillars used to evaluate how responsibly and sustainably a company operates beyond its financial performance.

Together, ESG factors provide a holistic view of a company’s long-term sustainability and ethical impact. Investors, regulators, and consumers increasingly rely on ESG metrics to assess whether businesses are not only profitable but also responsible, transparent, and aligned with global sustainability goals.

2.    Why is ESG compliance important for businesses in India?

From a business perspective, ESG compliance is helpful in risk management, reducing exposure to environmental liabilities, labor disputes, and governance scandals. It also drives operational efficiency through better resource management, waste reduction, and energy conservation.

In essence, ESG compliance is no longer optional, it is a strategic imperative for Indian businesses seeking to build trust, ensure regulatory alignment, attract investors, and secure their place in a global economy increasingly driven by sustainability and responsible governance.

3.    What are the key components of ESG compliance?

ESG compliance is built on three main pillars, Environmental, Social, and Governance. The Environmental aspect focuses on how a company manages its impact on nature, including pollution control, waste management, and compliance with laws.

The Social pillar covers employee welfare, diversity, human rights, and community development, aligning with CSR requirements under the Companies Act, 2013.

The Governance component ensures ethical conduct, transparency, and accountability through strong board practices, risk management, and adherence to SEBI’s BRSR framework

4.    Is ESG compliance mandatory for businesses in India?

The Securities and Exchange Board of India (SEBI) has made ESG compliance mandatory for the top 1,000 listed companies (by market capitalization) through the introduction of the Business Responsibility and Sustainability Report (BRSR) framework. Under this mandate, companies are required to report their ESG performance annually, providing detailed information on their environmental impact, social initiatives, and governance practices

5.    What is SEBI BRSR framework?

The Business Responsibility and Sustainability Report (BRSR) is a framework introduced by SEBI to make ESG (Environmental, Social, and Governance) disclosures mandatory for the top 1,000 listed companies in India. It requires companies to report annually on their environmental impact, social initiatives, and governance practices.

6.    Who regulates ESG reporting in India?

The Securities and Exchange Board of India (SEBI) is the primary regulator of ESG reporting in India. SEBI introduced the Business Responsibility and Sustainability Report (BRSR) framework, making ESG disclosures mandatory for the top 1,000 listed companies by market capitalization. In addition to SEBI, several other authorities play supporting roles such as the Ministry of Corporate Affairs (MCA), which issued the National Guidelines on Responsible Business Conduct (NGRBC).

7.    What are the benefits of ESG compliance for companies?

It helps companies build trust and credibility with investors, customers, and stakeholders by showcasing a commitment to ethical, transparent, and sustainable practices. Businesses that follow ESG principles often enjoy better access to capital, as investors increasingly prefer companies with strong sustainability and governance records.

8.    What roles do lawyers and legal advisors play in ESG compliance?

Lawyers and legal advisors play a crucial role in helping companies understand, implement, and maintain ESG compliance. They assist businesses in interpreting and adhering to regulatory requirements under various laws such as the Environment Protection Act, Companies Act (CSR provisions), and SEBI’s BRSR framework. Legal experts also help in drafting and reviewing policies, sustainability disclosures, and internal governance frameworks to ensure alignment with ESG principles.

9.    What are some global ESG reporting frameworks companies can follow?

Companies can adopt several global ESG reporting frameworks to enhance transparency and align with international sustainability standards. The most widely used include the Global Reporting Initiative (GRI) for comprehensive sustainability reporting, the Sustainability Accounting Standards Board (SASB) for industry-specific disclosures, and the Task Force on Climate-related Financial Disclosures (TCFD) for reporting climate-related risks.

ABOUT THE AUTHOR

Jyoti Singh is a Corporate Lawyer with expertise in business law, regulatory compliance, and Contract management. She is passionate about simplifying legal concepts for entrepreneurs and professionals, empowering them to make informed and responsible business decisions. Through her work and writing at SolvLegal, she aims to bridge the gap between law, business strategy, and sustainability.

DISCLAIMER

The information provided in this article is for general educational purposes and does not constitute a legal advice. Readers are encouraged to seek professional counsel before acting on any information herein. SolvLegal and the author disclaim any liability arising from reliance on this content.

SolvLegal is a modern legal solutions platform dedicated to helping businesses, startups, and entrepreneurs navigate India’s complex legal and regulatory landscape with clarity and confidence. Our mission is to simplify law and make legal compliance accessible, practical, and business-focused.