The evolution of Environmental, Social, and Governance (ESG) standards in India has followed a structured and progressive path. The journey began in 2011 when the Ministry of Corporate Affairs introduced the National Voluntary Guidelines on Social, Environmental, and Economic Responsibilities of Business. These guidelines aimed to promote ethical business practices among companies operating in India. In 2012, the Securities and Exchange Board of India mandated the top 100 listed companies to file a Business Responsibility Report based on these guidelines.
As international attention on sustainability grew, India took steps to align with global frameworks such as the Sustainable Development Goals and the United Nations Guiding Principles on Business and Human Rights. This alignment led to the revision of the original guidelines, culminating in the release of the National Guidelines on Responsible Business Conduct in 2019. The NGRBC was designed through extensive stakeholder consultations and aimed to encourage companies to go beyond mere regulatory compliance and adopt broader responsible business practices.
A committee was formed to finalize reporting formats for both listed and unlisted companies. The Business Responsibility Report framework was updated and renamed the Business Responsibility and Sustainability Report. Based on the NGRBC and the committee’s recommendations, SEBI made the BRSR mandatory for the top 1000 listed companies from the financial year 2022–23. For the financial year 2021–22, the reporting remained voluntary.
Recognizing the diverse business landscape in India, SEBI also introduced the BRSR Lite framework for unlisted companies. This framework simplified ESG reporting requirements while covering essential aspects. The Ministry of Corporate Affairs is expected to expand the reporting obligations to unlisted companies that meet specific thresholds in terms of turnover or capital. Smaller unlisted entities are encouraged to voluntarily adopt the BRSR Lite format.
The BRSR Core framework was introduced on March 29, 2023, to further enhance ESG disclosures. It focuses on India’s top 1000 listed entities and is a subset of the broader BRSR framework introduced in May 2021. The framework includes disclosure and assurance requirements for ESG-related activities, particularly those involving value chains. A gazette notification dated July 12, 2023, outlined a phased approach for mandatory reasonable assurance of BRSR Core disclosures. The plan requires 150 companies to comply in FY 2023–24, increasing to 1000 companies by FY 2026–27.
Ten Point Charter
In 2007, the then-Prime Minister of India introduced a Ten Point Charter for Business. This charter outlined expectations for ethical business practices and corporate contributions to national development. The charter emphasized inclusive employment, humane treatment of workers, ethical business practices, investment in communities, adoption of environmentally friendly technologies, promotion of socially responsible advertising, and encouragement of responsible consumption. It also promoted innovation and enterprise development.
This charter was a response to mounting public concerns about environmental, social, and economic violations by businesses. It acknowledged the need for corporate participation in achieving inclusive growth and sustainable development. The charter marked a foundational step toward formalizing ESG-related expectations in India.
Voluntary Corporate Social Responsibility Guidelines
In 2009, the Ministry of Corporate Affairs released the Voluntary Corporate Social Responsibility Guidelines. These guidelines reaffirmed the principles of the Ten Point Charter and addressed the challenges and opportunities presented by globalization and climate change. The guidelines acknowledged the demand for inclusive growth and responsible corporate behavior in the 21st century.
The guidelines identified six core elements that businesses were encouraged to adopt. These included care for all stakeholders, ethical business conduct, respect for workers’ rights and welfare, respect for human rights, environmental responsibility, and promotion of inclusive and social development. The aim was to create a standard for responsible behavior applicable to companies regardless of size or sector.
To develop a more robust framework, the Ministry of Corporate Affairs tasked the Indian Institute of Corporate Affairs with reviewing and refining the guidelines. A multi-stakeholder Guidelines Drafting Committee was formed with the mandate to create a framework that businesses of all sizes could voluntarily adopt. The committee emphasized the need to address inclusive growth and sustainability concerns.
The committee also drew upon various international and national sources to ensure the guidelines were comprehensive. These included ISO 26000 on social responsibility, the UN Global Compact, the OECD Guidelines for Multinational Enterprises, the Global Reporting Initiative framework, workplace standards by the Bureau of Indian Standards, and CSR guidelines by the Department of Public Enterprises.
National Voluntary Guidelines
In 2011, the Ministry of Corporate Affairs released the National Voluntary Guidelines on the Social, Environmental, and Economic Responsibilities of Business. These guidelines were structured around nine interrelated principles. Each principle was explained and accompanied by a set of core elements.
The principles covered social, environmental, and governance aspects. Social principles included stakeholder-specific issues and cross-cutting themes. Environmental principles focused on sustainability and lifecycle impacts. Governance principles emphasized ethical conduct and policy engagement.
The nine principles were as follows:
Businesses should conduct and govern themselves with ethics, transparency, and accountability
Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle
Businesses should respect and promote the well-being of all employees
Businesses should respect the interests of and be responsive toward all stakeholders, particularly the disadvantaged and marginalized..
Businesses should respect and promote human rights
Businesses should respect, protect, and restore the environment
Businesses should engage in influencing public and regulatory policy in a responsible manner
Businesses should support inclusive growth and equitable development
Businesses should engage with and provide value to their customers and consumers in a responsible manner
These guidelines established a framework for responsible business conduct and laid the foundation for subsequent regulatory frameworks.
Business Responsibility Reporting
In 2012, SEBI made it mandatory for the top 100 listed companies to include a Business Responsibility Report in their annual reports. This report was based on the National Voluntary Guidelines and aimed to enhance transparency and accountability in corporate disclosures.
Over time, the scope of mandatory BRR reporting was expanded to cover the top 500 listed companies. The objective was to ensure that companies that access public funds make comprehensive disclosures on their ESG practices. These disclosures were intended for all stakeholders and applied to companies across sectors, including manufacturing and services.
The reporting framework evolved into two formats: a comprehensive version and a Lite version. The comprehensive format was intended for larger companies, while the Lite version was more suited to smaller entities. Both formats aimed to promote responsible business practices and enhance stakeholder confidence.
Transition from NVGs to NGRBC
By 2017, it became evident that the National Voluntary Guidelines needed to be revised to keep pace with evolving global and national standards. International frameworks such as the United Nations Sustainable Development Goals, the Paris Agreement on Climate Change, and the United Nations Guiding Principles on Business and Human Rights had become central to discussions on corporate responsibility.
Recognizing the need to update the NVGs, the Ministry of Corporate Affairs initiated a review process in 2015. This included stakeholder consultations across the country and public feedback. The objective was to incorporate key global developments, address emerging ESG risks, and align national policies with international standards.
The result of this review was the National Guidelines on Responsible Business Conduct, which replaced the NVGs. The NGRBC retained the original principles but revised their language and scope to include terms like sustainability, integrity, and respect. The number of core elements increased from 48 to 53, reflecting the expanded focus on responsible business conduct.
The NGRBC was designed to be applicable to all businesses, irrespective of size, sector, ownership, or structure. It provided a framework for both Indian and multinational companies operating in India to adopt and integrate responsible business practices into their strategies and operations. The guidelines also encouraged businesses to influence their value chains by promoting similar standards among suppliers and partners.
National Guidelines on Responsible Business Conduct
The National Guidelines on Responsible Business Conduct, released in 2019, served as an update to the earlier National Voluntary Guidelines. These guidelines were the result of a comprehensive review that included input from various stakeholders and international frameworks.
The revised guidelines presented nine principles that businesses were expected to follow. These included ethical governance, sustainable product and service development, employee well-being, stakeholder engagement, human rights promotion, environmental protection, responsible public policy engagement, inclusive development, and consumer value.
Importantly, the NGRBC was not merely a reporting framework. It also served as a step-by-step guide for adopting responsible business conduct. The principles emphasized ethical behavior, transparent decision-making, and accountability. They provided detailed guidance for businesses to evaluate and enhance their social, environmental, and economic performance.
The NGRBC was structured into two chapters and several annexures. These annexures provided additional guidance, including frameworks for micro, small, and medium enterprises, a self-assessment tool based on the Business Responsibility Reporting Framework, a mapping of Indian laws against the principles, and references to international standards.
The NGRBC aimed to make responsible business conduct a core part of corporate strategy. By doing so, businesses could align with global trends, respond to stakeholder expectations, and contribute to sustainable development.
Evolution of ESG in India
India’s approach to ESG has been evolving steadily in response to increasing global awareness and investor demands. Although ESG as a concept originated in developed markets, Indian regulatory bodies and corporations have begun to embrace its potential for promoting sustainable growth. Early ESG initiatives in India were largely voluntary, often aligned with international standards or driven by multinational corporations operating in India. However, regulatory mandates and structured reporting frameworks have been introduced in recent years to ensure greater accountability. The journey began with the Ministry of Corporate Affairs (MCA) introducing the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) in 2011. These guidelines aimed to encourage businesses to adopt responsible conduct. Over time, these evolved into the National Guidelines on Responsible Business Conduct (NGRBC), which now form the basis of ESG regulations in the country. One of the most significant developments was the Securities and Exchange Board of India (SEBI) mandating the top 1,000 listed companies by market capitalization to submit a Business Responsibility and Sustainability Report (BRSR) from the financial year 2022-23 onwards. This replaced the earlier Business Responsibility Report (BRR), representing a more structured and quantifiable approach to ESG disclosures.
Key ESG Issues in the Indian Context
The ESG priorities in India differ from those in other countries due to the country’s unique socio-economic and environmental challenges. On the environmental front, critical concerns include climate change, water scarcity, air pollution, and waste management. The country faces growing pressure to reduce its carbon footprint, transition to renewable energy sources, and adopt sustainable industrial practices. Social factors in India revolve around diversity and inclusion, employee welfare, community engagement, health and safety standards, and ethical supply chain practices. With a vast population and a large informal workforce, ensuring fair labor practices and social equity is a persistent concern. Governance-related challenges include corporate accountability, board independence, business ethics, and transparency. India has witnessed several corporate governance scandals in the past, prompting investors and regulators to demand stricter oversight and compliance. The emergence of ESG as a framework for measuring corporate responsibility is gradually addressing these issues and reshaping the way businesses operate.
ESG Regulatory Landscape in India
India’s ESG regulatory ecosystem is driven by multiple agencies and guidelines, with SEBI and MCA playing key roles. The MCA introduced the NGRBCs as a comprehensive framework consisting of nine principles for responsible business conduct. These principles encourage businesses to operate ethically, protect the environment, respect human rights, and promote inclusive development. SEBI’s introduction of the BRSR framework marked a shift from narrative-style reporting to data-driven disclosures. The BRSR is structured into three sections: General Disclosures, Management and Process Disclosures, and Principle-wise Performance Disclosure based on the NGRBC principles. Companies are expected to report not just policies and practices but also key performance indicators and measurable outcomes. Another notable regulation is the Companies Act, 2013, which mandates Corporate Social Responsibility (CSR) spending for certain companies. This law, though not explicitly framed as an ESG regulation, complements ESG goals by requiring qualifying firms to spend at least 2% of their average net profits on CSR activities. The Environmental Protection Act, Labour Codes, and other sector-specific guidelines also play an indirect role in shaping ESG compliance. Together, these regulations contribute to a structured ESG compliance environment that encourages transparency, accountability, and sustainable growth.
Role of SEBI and BRSR
SEBI has been instrumental in institutionalizing ESG reporting in India. In 2021, it introduced the BRSR framework to enhance the quality and comparability of ESG disclosures. Applicable to the top 1,000 listed companies from FY 2022-23, BRSR provides a comprehensive format for ESG reporting aligned with global best practices. The BRSR framework has three main parts. The first section, General Disclosures, captures essential details such as company profile, business activities, locations, and employee data. The second section, Management and Process Disclosures, examines the governance mechanisms and processes adopted by the company to implement the NGRBC principles. The third and most detailed section is Principle-wise Performance Disclosures. It covers nine core principles that align with the NGRBC, ranging from ethical governance to respect for human rights and environmental stewardship. Within each principle, companies are required to disclose both qualitative and quantitative data, making ESG performance measurable and verifiable. SEBI has also encouraged companies to adopt the BRSR Core framework, which includes sector-specific key performance indicators. The BRSR Core is currently voluntary for FY 2023-24 but is expected to become mandatory in the future. Through these initiatives, SEBI aims to ensure that ESG data is transparent, relevant, and comparable across companies and sectors, thereby enabling investors to make informed decisions.
The Nine Principles of the National Guidelines on Responsible Business Conduct (NGRBC)
The NGRBC framework, introduced by the Ministry of Corporate Affairs, is central to ESG adoption in India. It outlines nine principles that businesses are expected to follow to ensure responsible conduct. Principle 1 focuses on ethical, transparent, and accountable governance. Companies are required to avoid corrupt practices, establish strong internal controls, and disclose relevant information in a timely manner. Principle 2 advocates for sustainability throughout the life cycle of products and services. Businesses are encouraged to promote resource efficiency, reduce environmental impact, and adopt sustainable procurement practices. Principle 3 pertains to employee well-being. It emphasizes providing safe working conditions, fair wages, opportunities for skill development, and non-discriminatory practices. Principle 4 requires businesses to respect the interests of all stakeholders, including shareholders, employees, customers, and local communities. This ensures that business decisions are inclusive and participatory. Principle 5 emphasizes promoting human rights and preventing discrimination, harassment, and child labor. Companies must have grievance redressal mechanisms and conduct human rights due diligence. Principle 6 highlights the importance of environmental protection. It mandates businesses to minimize their ecological footprint, adopt cleaner technologies, and contribute to the conservation of biodiversity. Principle 7 encourages responsible advocacy. Businesses should engage in policy advocacy ethically, transparently, and in a manner aligned with the public interest. Principle 8 focuses on inclusive growth and equitable development. Companies are expected to contribute to the upliftment of underprivileged communities and support social infrastructure. Principle 9 deals with consumer protection. It calls for fair marketing practices, ensuring product safety and quality, and addressing consumer grievances effectively. These principles serve as the foundation for ESG reporting and are reflected in the structure of the BRSR format.
Implementation of ESG Practices in Indian Companies
Implementing ESG practices requires a structured approach, leadership commitment, and integration with core business strategies. Indian companies are increasingly recognizing the long-term benefits of ESG, such as enhanced brand reputation, operational efficiency, and investor interest. The first step in implementation is conducting a materiality assessment to identify ESG factors most relevant to the business and its stakeholders. This helps prioritize areas where ESG integration can create the most value. Companies then formulate policies, frameworks, and governance structures to address these issues. Leadership involvement is critical to successful ESG implementation. Boards and senior management must champion ESG goals, allocate resources, and embed ESG into strategic planning and risk management. Training programs and awareness campaigns are essential for building an ESG-conscious culture across all levels of the organization. Many Indian firms have established dedicated ESG committees or sustainability officers to oversee implementation and monitor progress. Integration with business operations includes adopting energy-efficient technologies, reducing waste, ensuring workplace diversity, maintaining ethical supply chains, and enhancing community engagement. Periodic assessments, audits, and stakeholder feedback are used to measure effectiveness and drive continuous improvement. Furthermore, aligning ESG initiatives with global frameworks such as the UN Sustainable Development Goals (SDGs), the Global Reporting Initiative (GRI), and the Task Force on Climate-related Financial Disclosures (TCFD) enhances credibility and global comparability. Indian companies are increasingly using technology and data analytics to monitor ESG metrics and support informed decision-making.
ESG Reporting and Disclosure Requirements
In India, ESG reporting has shifted from being voluntary to becoming a regulated practice, especially for the top 1,000 listed companies. The BRSR format, mandated by SEBI, requires companies to disclose ESG-related data in a structured and standardized manner. Reporting in the BRSR format comprises three sections. The first section includes general disclosures on company details, employee data, and business activities. The second section focuses on management and process disclosures that reflect how ESG principles are integrated into the organization. The third and most comprehensive section is principle-wise performance disclosures aligned with the nine NGRBC principles. This section requires companies to provide detailed information on ESG practices, performance metrics, and key outcomes. In addition to BRSR, companies may also voluntarily publish standalone ESG or sustainability reports based on global standards such as GRI, SASB, or TCFD. These reports enhance transparency and offer investors deeper insights into ESG strategies and performance. Companies must also disclose their CSR activities under Section 135 of the Companies Act, including the amount spent, nature of projects, and implementation agencies. Further, disclosures related to environmental clearances, energy consumption, labor laws compliance, and board governance are required under various other regulations. Timely and accurate ESG reporting enhances stakeholder trust, supports better risk management, and facilitates access to responsible capital. As investor scrutiny increases, robust ESG reporting is becoming an essential part of corporate strategy.
ESG Ratings and Indices in India
ESG ratings and indices help investors assess the sustainability performance of companies and make informed investment decisions. Several Indian and international agencies offer ESG ratings based on a company’s disclosures, policies, practices, and performance across environmental, social, and governance parameters. Prominent ESG rating agencies operating in India include CRISIL, MSCI, Sustainalytics, and CARE Ratings. These agencies evaluate companies using proprietary methodologies and assign ESG scores or ratings, which investors use to gauge risks and opportunities. Higher ESG scores indicate better performance in managing sustainability-related risks. In addition to ratings, ESG indices track the performance of companies with strong ESG credentials. For instance, the S&P BSE 100 ESG Index and the Nifty ESG Index include companies from the broader indices that meet specified ESG criteria. These indices enable ESG-conscious investors to invest in portfolios aligned with their values and sustainability goals. ESG ratings are also used by asset managers to develop ESG-focused investment funds. Several mutual funds and portfolio management schemes in India now incorporate ESG factors in their investment strategies. However, differences in methodologies and data sources among rating agencies can lead to varying scores for the same company, underscoring the need for greater standardization. Companies are increasingly engaging with rating agencies, enhancing their disclosures, and benchmarking their performance to improve ESG ratings. These ratings serve not only as an external validation of sustainability performance but also as a tool for internal improvement and strategic planning.
ESG Investing in India
Environmental, Social, and Governance (ESG) investing in India is gaining momentum as investors seek to align financial returns with sustainable and responsible business practices. ESG investing integrates non-financial factors into investment decisions to better manage risk and generate long-term value. In India, ESG investing has evolved from a niche strategy to a mainstream approach embraced by institutional and retail investors. Several asset management companies now offer ESG-themed mutual funds, while ESG indices are increasingly being used as benchmarks. Regulatory support, such as SEBI’s Business Responsibility and Sustainability Reporting (BRSR), has further strengthened ESG investing by mandating ESG-related disclosures for listed companies. ESG investment strategies include negative screening, positive screening, best-in-class selection, ESG integration, impact investing, and shareholder engagement. Negative screening excludes companies involved in harmful activities, while positive screening focuses on companies with strong ESG performance. ESG integration involves incorporating ESG factors into traditional financial analysis, whereas impact investing targets investments that generate measurable social and environmental impact alongside financial returns. Challenges to ESG investing in India include data availability, lack of standardization, greenwashing, and limited awareness. Investors often struggle with inconsistent ESG ratings and disclosures, making it difficult to compare companies. However, initiatives such as the BRSR and efforts by rating agencies to enhance transparency are helping to address these issues. The demand for ESG products is expected to grow as investors become more conscious of sustainability and corporate responsibility.
ESG and Corporate Governance
Corporate governance is a critical pillar of ESG, focusing on the systems, processes, and principles that guide a company’s management and decision-making. Good governance ensures accountability, transparency, fairness, and ethical conduct, which are essential for long-term business success and stakeholder trust. In India, the corporate governance framework is governed by the Companies Act, SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations, and guidelines issued by regulatory bodies. These regulations mandate the establishment of independent boards, audit committees, risk management systems, and policies on ethics and whistle-blowing. ESG considerations have expanded the scope of corporate governance to include sustainability risks, stakeholder engagement, and diversity and inclusion. Companies are now expected to align board oversight with ESG priorities, integrate ESG risks into enterprise risk management, and disclose governance practices related to ESG performance. ESG-aligned governance also emphasizes executive compensation linked to sustainability metrics, anti-corruption measures, and transparent shareholder communication. The BRSR format encourages companies to report governance indicators, including board diversity, ESG training, and leadership’s role in ESG strategy. Indian companies increasingly recognize the value of strong governance in driving ESG outcomes, managing reputational risk, and attracting responsible capital.
Role of Stakeholders in ESG Adoption
The successful adoption of ESG principles depends on the involvement of various stakeholders, including companies, regulators, investors, consumers, civil society, and rating agencies. Companies play a central role by integrating ESG into business strategy, operations, and reporting. They must identify material ESG issues, set targets, monitor performance, and communicate transparently with stakeholders. Leadership commitment and a culture of sustainability are key drivers of ESG success. Regulators such as SEBI, the Ministry of Corporate Affairs (MCA), and the Reserve Bank of India (RBI) have issued guidelines and frameworks that shape ESG practices. SEBI’s BRSR framework is a notable regulatory initiative that enhances ESG transparency and accountability. Investors are increasingly incorporating ESG criteria into their investment decisions, engaging with companies on ESG performance, and using proxy voting to influence governance practices. Institutional investors, in particular, are setting the tone for ESG integration through responsible investment policies. Consumers are demanding sustainable products and ethical business practices, pressuring companies to adopt ESG principles. Social media and public opinion play a powerful role in shaping corporate behavior. Civil society organizations and non-profits contribute by advocating for ESG issues, monitoring corporate conduct, and educating stakeholders. ESG rating agencies and data providers assess company performance based on ESG metrics and provide ratings used by investors. While these ratings face challenges related to consistency and transparency, they play an important role in shaping market perception.
International ESG Reporting Frameworks and India’s Alignment
India’s ESG reporting practices are gradually aligning with international frameworks to enhance comparability, transparency, and investor confidence. Several global frameworks and standards have influenced ESG reporting in India, including the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD), and the International Sustainability Standards Board (ISSB). The GRI framework, widely used in India, provides a comprehensive approach to sustainability reporting covering environmental, social, and economic aspects. It emphasizes stakeholder inclusiveness and materiality, aligning with the BRSR’s focus on stakeholder engagement. The SASB standards offer sector-specific ESG disclosures, helping companies identify financially material issues. Some Indian companies use SASB in conjunction with BRSR for more targeted disclosures. The TCFD framework, focused on climate-related risks and opportunities, has gained prominence among Indian companies responding to investor demands for climate disclosures. TCFD recommends disclosures around governance, strategy, risk management, and metrics related to climate change. India’s BRSR Core framework incorporates select KPIs that align with global standards such as TCFD and GRI. This alignment facilitates interoperability and positions Indian companies to attract global ESG-focused capital. The ISSB is working toward a unified global sustainability disclosure standard. India’s participation in global discussions and efforts to align domestic frameworks with ISSB’s standards will shape the future of ESG reporting. The convergence of global and local standards will strengthen ESG practices and improve trust in ESG disclosures.
Conclusion
The emergence of Environmental, Social, and Governance (ESG) principles in India marks a transformative shift in how businesses operate and disclose their impact on society and the planet. As ESG considerations gain prominence among investors, regulators, and stakeholders, companies are no longer evaluated solely on their financial metrics but also on their sustainability and ethical governance.
India’s ESG journey is underpinned by a growing regulatory framework led by SEBI’s Business Responsibility and Sustainability Reporting (BRSR) requirements and the increasing alignment with global standards such as GRI, SASB, and TCFD. Companies, particularly those listed in the top 1000 by market capitalization, are now expected to report not just their profits, but also their environmental stewardship, social responsibility, and governance practices with rigor and transparency.