INTRODUCTION
What was once treated as a matter of voluntary, good-faith disclosure has, over the past decade, hardened into a dense and still-e xpanding web of regulation across India’s business and finance sectors. This shift is not uniform: the extent to which a company must treat Environmental, Social and Governance (ESG) considerations as a legal obligation, rather than a reputational choice, depends on its size, listing status, sector, and the regulator concerned. A large listed company faces disclosure and assurance obligations under securities law that a small private company does not; a bank faces climate-risk obligations that a manufacturer does not; and every company, regardless of size, remains subject to environmental statutes that long predate the ESG label.
This piece traces four strands of India’s ESG regulatory architecture – the Securities and Exchange Board of India’s (SEBI) Business Responsibility and Sustainability Reporting (BRSR) framework, the corporate social responsibility (CSR) mandate under the Companies Act, 2013, environmental legislation, and the Reserve Bank of India’s (RBI) green finance framework – and considers what their combined effect means in practice for businesses operating in India.
FROM VOLUNTARY DISCLOSURE TO COMPULSORY REPORTING: SEBI’S BRSR FRAMEWORK
India’s engagement with ESG disclosure began in 2009 with voluntary guidelines from the Ministry of Corporate Affairs, and progressed through SEBI’s mandate for the top 100 listed companies to publish Business Responsibility Reports from 2012, later extended to the top 500 companies in 2016.[1] The decisive shift came in 2021, when SEBI replaced this with the mandatory Business Responsibility and Sustainability Reporting (BRSR) framework for the top 1,000 listed companies, structured around nine ESG principles.[2]
BRSR aligns India’s disclosure regime with comparable frameworks abroad, including the EU’s Corporate Sustainability Reporting Directive, the UK’s Sustainability Disclosure Requirements, and evolving US ESG disclosure norms.[3] In 2023, SEBI introduced ‘BRSR Core’ – a subset of about thirty key performance indicators, covering matters such as Scope 1 and 2 greenhouse gas emissions, water consumption, gender diversity, pay equity, and occupational safety, that must undergo independent assurance.[4] This assurance requirement is being phased in gradually, from the top 150 listed companies in FY 2023–24 to the top 1,000 by FY 2026–27.[5] The same 2023 circular also required listed companies to report BRSR Core indicators for significant value-chain partners; SEBI eased this to a voluntary basis in March 2025, deferring mandatory value-chain assurance.[6]
Non-compliance carries consequences: failure to file a BRSR report attracts a penalty of ₹2,000 per day under SEBI’s Listing Regulations.[7] Yet scholarship on BRSR’s early implementation identifies persistent gaps – inconsistent data quality across large- and mid-cap companies, limited third-party assurance capacity, overlap with CSR and environmental compliance requirements, and a continuing risk of greenwashing where assurance standards fall short of international benchmarks such as the ISSB and ESRS.[8] For companies, this means the compliance process itself remains unsettled, with real legal exposure for inaccurate or unsupported disclosures.
THE COMPANIES ACT, 2013: CSR AS A STATUTORY, NOT A MORAL, OBLIGATION
Section 135 of the Companies Act, 2013 supplies the ‘S’ and ‘G’ components of ESG in India, and was an early instance of corporate social responsibility being converted from good practice into a binding legal requirement.[9] Companies above prescribed thresholds of net worth, turnover, or net profit must constitute a CSR Committee of the Board and spend at least 2% of their average net profits of the preceding three years on CSR activities, as set out in the Companies (Corporate Social Responsibility Policy) Rules, 2014.[10]
Empirical research using the variation created by Section 135 as a natural experiment finds a measurable effect on corporate behaviour, including CSR expenditure, advertising spend, and accounting performance.[11] Legal scholars remain divided on whether mandating CSR through legislation makes it more effective or reduces it to a ‘tick-box’ compliance exercise.[12] Directors’ fiduciary duties under Section 166(2) operate as a complementary accountability mechanism.[13]
For businesses, Section 135 functions as a hard budget constraint tied to profitability, coupled with board-level governance responsibilities and a reporting obligation through Form CSR-2, filed as an addendum to the annual financial return.[14]
ENVIRONMENTAL LEGISLATION AND THE LAYER OF GOVERNANCE
Beyond ESG reporting and CSR, Indian companies remain subject to a separate and older layer of environmental statutory obligation, principally the Environment (Protection) Act, 1986, which operates independently of – and sometimes overlaps with – ESG reporting requirements. This overlap is not merely conceptual. A company can file a fully compliant BRSR report, including favourable environmental KPIs, while still facing enforcement action under the Environment (Protection) Act for a specific breach, such as exceeding permitted emission or effluent standards, because the two regimes are policed by different authorities, on different timelines, and by reference to different standards of proof. SEBI’s disclosure framework asks what a company reports about its environmental performance; the Environment (Protection) Act and its allied statutes ask whether that performance actually complies with substantive legal standards, enforced by pollution control boards, the National Green Tribunal, and courts.
Legal scholarship examining corporate environmental responsibility in India – drawing on the experience of listed companies and compliance officers – identifies considerable room for improvement in enforcement, a persistent risk of greenwashing, and the absence of any comprehensive model for harmonising environmental compliance with ESG governance. Practically, this means that BRSR compliance is not a substitute for environmental-law compliance, and companies that treat the two as interchangeable risk both regulatory liability and reputational exposure if disclosed ESG performance diverges from what enforcement authorities actually find on the ground.
FINANCIAL SECTOR PRESSURES: RBI’S GREEN FINANCE FRAMEWORK
ESG-related regulatory pressure extends beyond listed companies into the financial sector through the Reserve Bank of India (RBI). Following its 2022 discussion paper on climate risk and sustainable finance, aligned with the Task Force on Climate-related Financial Disclosures, the RBI issued its Framework for Acceptance of Green Deposits in April 2023, requiring regulated entities to ring-fence green deposit proceeds for specified green activities, subject to annual verification and impact assessment, pending the notification of an official Indian green taxonomy.[15]
This was followed by a draft Disclosure Framework on Climate-related Financial Risks in February 2024, which would require regulated entities to report their climate exposure across governance, strategy, risk management, and metrics and targets.[16] Commentary on the draft framework points to practical difficulties for regulated entities, including a lack of granular data, reliability concerns, the absence of standardised methodologies, and uneven institutional preparedness across entities of different sizes.[17] The RBI’s Report on Currency and Finance (2022–23) estimates India’s annual green-transition financing need at around 2.5% of GDP through 2030.[18]
For banks and non-banking financial companies, this means climate risk is becoming embedded in prudential regulation itself, rather than remaining a supplementary disclosure exercise.
IMPLICATIONS FOR COMPANIES
Taken together, these four strands place Indian businesses within a multi-layered ESG compliance environment:
- Disclosure obligations under SEBI’s BRSR and BRSR Core framework, with third-party assurance being phased in for large listed companies;[19]
- Spending and governance obligations under Section 135 of the Companies Act, with board-level accountability;[20]
- Substantive liability under environmental legislation such as the Environment (Protection) Act, 1986, which filing ESG disclosures does not discharge;[21]
- Climate-risk governance and disclosure obligations for regulated financial-sector entities under the RBI’s green deposit and climate-risk frameworks.[22]
The practical burden this creates is cumulative rather than merely additive: a large listed company may need to satisfy SEBI’s assurance timelines, the Companies Act’s CSR reporting cycle, environmental compliance audits, and – if it is a bank or NBFC – the RBI’s climate-risk disclosures, each administered by a different regulator, on a different schedule, and assessed against different standards of evidence. Meeting one obligation does not automatically satisfy another, which increases the cost of compliance and the risk of inadvertent gaps.
The overall trajectory is toward greater mandation, third-party assurance, and enforcement, with academic research repeatedly flagging greenwashing and data quality as the central unresolved issues for both businesses and regulators.[23]
CONCLUSION
The four regulatory strands traced above – SEBI’s disclosure regime, the Companies Act’s CSR mandate, environmental legislation, and the RBI’s green finance framework – did not emerge from a single, coordinated ESG policy. Each has its own statutory origin, regulator, and enforcement logic, and they overlap only partially. For businesses, the practical consequence is that ESG compliance in India cannot be managed as a single checklist item; it requires tracking at least four separate regulatory timelines and building internal systems capable of producing assurance-grade data, not merely disclosure-grade narrative. As assurance and value-chain requirements continue to phase in over the coming years, the compliance burden is likely to grow before it stabilises, making early investment in ESG governance systems a matter of legal risk management rather than corporate goodwill.
Author(s) Name: M. Srujana (Alliance University)
References:
[1]Atasi Mohanty et al., ‘‘E’ of Environmental, Social, and Governance (ESG) in India: reporting, review and future prospects’ (2025) 3 Discover Global Society <https://link.springer.com/article/10.1007/s44282-025-00288-0> accessed 19 July 2026
[2] Rajkannan Rajan, ‘Evolving Corporate Sustainability Reporting Landscape in India: A Literature Review of SEBI’s BRSR Framework (2021–2025)’ (2025) 3(7) International Research Journal on Advanced Engineering and Management 2402 <https://doi.org/10.47392/IRJAEM.2025.0380> accessed 19 July 2026
[3] Aahna Dwivedi and Muskan Mahant, ‘Assessing The Effectiveness Of SEBI’s Business Responsibility And Sustainability Reporting (BRSR) Framework In Promoting Corporate ESG Compliance And Accountability In India’ (2025) 7(6) Indian Journal of Law and Legal Research <https://www.ijllr.com/post/assessing-the-effectiveness-of-sebi-s-business-responsibility-and-sustainability-reporting-brsr-fr> accessed 19 July 2026
[4] BRSR Core – Framework for Assurance and ESG Disclosures for Value Chain (Securities and Exchange Board of India, 2023)
[5] Ibid
[6] Measures to Facilitate Ease of Doing Business with respect to Framework for Assurance or Assessment, ESG Disclosures for Value Chain, and Introduction of Voluntary Disclosure on Green Credits (Securities and Exchange Board of India, 2025)
[7] Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015
[8] Dwivedi (n 3)
[9] Companies Act 2013, s 135; Soumyadeep Paul and Dr Ajaz Afzal Lone, ‘Enforcing CSR In India: A Critical Review Of Section 135’ (2025) 7(5) Indian Journal of Law and Legal Research <https://www.ijllr.com/post/enforcing-csr-in-india-a-critical-review-of-section-135> accessed 19 July 2026
[10] Companies (Corporate Social Responsibility Policy) Rules 2014
[11] Dhammika Dharmapala and Vikramaditya Khanna, ‘The impact of mandated corporate social responsibility: Evidence from India’s Companies Act of 2013’ (2018) 56 International Review of Law and Economics <https://doi.org/10.1016/j.irle.2018.09.001> accessed 19 July 2026
[12] Rashneet Kaur, ‘Corporate Social Responsibility Under Section 135 of the Companies Act, 2013: A Legal Obligation or A Moral Imperative?’ (2025) 7(5) Indian Journal of Law and Legal Research <https://www.ijllr.com/post/corporate-social-responsibility-under-section-135-of-the-companies-act-2013-a-legal-obligation-or> accessed 19 July 2026
[13] Companies Act 2013, s 166(2)
[14] Companies Act 2013, s 135; Companies (Accounts) Rules 2014
[15] Framework for Acceptance of Green Deposits (Reserve Bank of India, 2023)
[16] Draft Disclosure Framework on Climate-related Financial Risks, 2024 (Reserve Bank of India, 2024)
[17] ‘Embracing climate-resilience: A new era of disclosure for Indian financial entities’ (PwC India) <https://www.pwc.in/blogs/disclosure-framework-on-climate-related-financial-risks-2024.html > accessed 19 July 2026
[18] S Shrivastav, ‘Journal of Sustainable Finance’ (2026) 10(01) International Journal of Creative and Open Research in Engineering and Management accessed 19 July 2026
[19] Companies Act 2013; BRSR Core – Framework for Assurance and ESG Disclosures for Value Chain (n 4)