ESG in India: A Companies Act Perspective

Connecting Law, Governance & Sustainability

1. Introduction: The Legal Spine of ESG in India

ESG (Environmental, Social, Governance)

is a framework for evaluating a company’s performance and impact beyond financial metrics:

Environmental (E):

How a company manages its interaction with the natural environment — energy use, emissions, waste management, climate change mitigation, resource efficiency.

Social (S):

How it manages relationships with employees, customers, suppliers, and the community — labour practices, diversity, health & safety, human rights, community development.

Governance (G):

How it is directed and controlled — board structure, transparency, ethics, compliance, shareholder rights, and risk management.

In India, ESG is increasingly law-linked, with disclosure and accountability requirements embedded in the Companies Act, 2013, CSR Rules, MCA guidelines, and SEBI’s sustainability reporting frameworks.

Purpose of this Article:

To identify and map the key ESG-related provisions embedded within the Companies Act, 2013 and its subsequent rules and amendments, and to explain how these statutory requirements connect with and support modern ESG reporting frameworks—including the MCA’s National Guidelines on Responsible Business Conduct (NGRBC) and SEBI’s Business Responsibility and Sustainability Reporting (BRSR) regime. This mapping will help companies understand how legal compliance forms the backbone of ESG performance in India, ensuring alignment with both regulatory expectations and global sustainability standards.

2. The Companies Act Hooks for ESG

2.1 Section 134 & Rule 8 of Companies (Accounts) Rules, 2014

Mandatory Board’s Report Disclosures:

Conservation of energy
Technology absorption
Foreign exchange earnings/outgo

Link to “E” and “S” in ESG.
Boards can go beyond mere check-the-box compliance by making their ESG disclosures more strategic, transparent, and data-rich, which not only satisfies regulators but also builds trust with investors and stakeholders.

2.2 Section 135 & Companies (CSR Policy) Rules, 2014

CSR applicability thresholds.
2% average net profit obligation.
Amendments in 2021–2022:

Unspent CSR Funds → UCSRA / Schedule VII transfer.
Implementation Routes → Eligible implementing agencies registration.
Impact Assessments → ₹10 cr avg CSR obligation + ₹1 cr project outlay; capped spend.

Under Section 135 of the Companies Act, 2013 (CSR provisions), penalties for non-compliance—particularly after the 2021 amendments—are monetary and apply to both the company and its officers in default

2.3 Governance Framework Supporting “G”

Section 166 (Duties of Directors).
Sections 177 & 178 (Audit Committee, NRC, vigil mechanism).
Schedule IV (Code for Independent Directors).
How boards can formally integrate ESG into governance charters.

3. From Principles to Practice: NGRBC & BRSR

3.1 The Nine NGRBC Principles – ESG Mapping

NGRBC Principle	ESG Pillar	Core Focus Area
P1. Businesses should conduct and govern themselves with integrity, and in a manner that is ethical, transparent, and accountable.	Governance (G)	Ethics, transparency, anti-corruption, compliance with laws.
P2. Businesses should provide goods and services in a manner that is sustainable and safe.	Environmental (E) + Social (S)	Sustainable production, product safety, life-cycle impacts.
P3. Businesses should respect and promote the well-being of all employees, including those in their value chain.	Social (S)	Labour welfare, diversity, inclusion, health & safety, skill development.
P4. Businesses should respect the interests of and be responsive to all stakeholders, especially those who are disadvantaged, vulnerable, and marginalised.	Social (S)	Stakeholder engagement, inclusivity, community support.
P5. Businesses should respect and promote human rights.	Social (S)	Non-discrimination, freedom of association, protection against exploitation.
P6. Businesses should respect, protect, and make efforts to restore the environment.	Environmental (E)	Resource efficiency, emissions reduction, biodiversity protection, pollution prevention.
P7. Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent.	Governance (G)	Policy advocacy ethics, lobbying transparency, fair competition.
P8. Businesses should promote inclusive growth and equitable development.	Social (S) + Governance (G)	Community development, CSR, equitable access to opportunities.
P9. Businesses should engage with and provide value to their consumers in a responsible manner.	Social (S) + Governance (G)	Consumer rights, fair marketing, product responsibility, data privacy.

3.2 BRSR (Business Responsibility & Sustainability Reporting)

Applicability: top 1,000 listed entities under SEBI LODR Reg 34(2)(f).

3.3 BRSR Section-Wise Coverage

Section	Content Focus	Purpose	Connection to ESG & NGRBC
Section A: General Disclosures	Basic corporate profile: CIN, registered office, industry, number of employees, operations (domestic & overseas), CSR details, products/services, turnover, net worth, listing status.	Establishes organisational identity & reporting scope.	Sets context for ESG data; aligns with G (corporate governance) and S (workforce data).
Section B: Management & Process Disclosures	Governance structure for ESG, policies in place for each NGRBC principle, processes for stakeholder engagement, grievance redressal mechanisms.	Demonstrates management’s commitment, accountability, and oversight on ESG matters.	Heavily tied to G pillar, supports integration of E & S in business processes.
Section C: Principle-Wise Performance (KPIs)	Quantitative & qualitative disclosures for each of the 9 NGRBC principles — e.g.: • E: energy consumed, emissions, waste generated, water usage.• S: workforce diversity, safety incidents, community investments.• G: anti-corruption cases, board independence, policy advocacy.	Shows actual performance outcomes and progress on ESG commitments.	Direct mapping of each principle to ESG metrics.
BRSR Core (subset within C)	High-priority KPIs that require reasonable assurance over time — e.g., GHG emissions (Scope 1 & 2), gender diversity %, injury rates, water recycled, wages, supplier ESG screening.	Improves data credibility and comparability.	E, S, and G data points validated for investor confidence.

4. Regulating ESG Ratings: SEBI’s Framework for ESG Rating Providers (ERPs)

4.1. Background & Objective

Introduced by SEBI in 2023 through amendments to the SEBI (Credit Rating Agencies) Regulations, 1999, creating a dedicated framework for entities offering ESG ratings in India.
Objective: enhance transparency, credibility, and comparability of ESG ratings used by investors, issuers, and other stakeholders.

4.2. Registration Requirements

Any entity providing ESG ratings in India must register with SEBI as an ERP.
Can operate as a separate legal entity or under an existing SEBI-registered Credit Rating Agency.
Must have minimum net worth requirements (e.g., ₹10 crore for standalone ERPs).

4.3. Governance & Independence

Board-level oversight of ESG rating methodologies and conflict-of-interest management.
Independent directors and separation of rating functions from commercial functions to ensure impartiality.
Mandatory internal controls and periodic audits of processes.

4.4. Methodology & Disclosure Norms

Public disclosure of rating methodology, including:

Weightages for E, S, and G factors.
Data sources (self-disclosures, third-party, public domain).
Treatment of missing or unreliable data.

Annual review and updating of methodologies.
Publication of rating scales and what each rating symbol means.

4.5. Conflict of Interest Management

Prohibition on providing ESG consultancy/advisory services to the same entity being rated.
Cooling-off periods between consultancy and rating assignments.
Disclosure of any potential conflicts in public reports.

4.6. Ongoing Compliance

Submission of periodic returns to SEBI.
Cooperation in inspections and investigations.
Immediate reporting of material breaches or systemic issues in rating practices.

4.7. Why This Matters for Companies

Companies engaging with ERPs will need to share accurate, verifiable ESG data.
Discrepancies between company ESG reports (BRSR) and ERP assessments can impact investor perception and capital access.
Opportunity for proactive companies to engage with ERPs early and ensure alignment of ESG strategy with rating criteria.

5. Practical Compliance Playbook

Boardroom Actions:

Annual ESG materiality review:

Each year, boards should reassess which ESG issues are most relevant to their business and stakeholders, considering regulatory changes, market trends, and emerging risks. This ensures ESG priorities stay current and strategically aligned.

Integrating ESG risks in risk registers:

ESG-related risks—such as climate impact, labour unrest, or governance failures—should be embedded in the company’s main risk register. This integrates ESG into enterprise risk management rather than treating it as a separate silo.

Linking management KPIs to ESG performance:

Key performance indicators for senior management should include measurable ESG targets, such as emissions reduction or diversity goals. This ties leadership incentives directly to sustainable outcomes.

Disclosure Calendar:

Rule 8 disclosures in Board’s Report:

Companies must report on aspects like energy conservation, technology absorption, foreign exchange, and other ESG-related metrics under Rule 8. This ensures transparency and statutory compliance in the annual Board’s Report.

CSR Annual Report & CSR-2 MCA filing:

Companies covered under Section 135 must publish their CSR activities and spend in the Board’s Report and submit the CSR-2 form to the MCA. This documents compliance and provides visibility on social initiatives.

Listed entity BRSR/BRSR Core filing timelines:

Top listed entities are required to submit BRSR or BRSR Core disclosures annually along with their financial statements. BRSR Core requires phased assurance of select KPIs to improve credibility and investor confidence.

Assurance Readiness:

Build internal data trails:

Maintain clear, verifiable records of all ESG-related data, including energy use, emissions, social initiatives, and governance actions. This ensures that reported metrics can be traced and validated during audits.

Coordinate with auditors/assurance providers early:

Engage auditors or third-party assurance providers at the start of the reporting cycle to align on methodology, scope, and data requirements. Early coordination reduces discrepancies and strengthens credibility.

Map data owners for E, S, G indicators:

Assign responsibility for collecting and verifying environmental, social, and governance data to specific individuals or teams. This ensures accountability and timely reporting of accurate ESG metrics.

6. What’s Changing in 2025

SEBI’s easing of BRSR Core value-chain reporting burden:

SEBI has relaxed certain requirements for reporting ESG performance across the supply chain, reducing compliance pressure on listed entities while maintaining disclosure quality.

New rules on withdrawal of ESG ratings:

SEBI now allows ESG rating providers to withdraw ratings under defined conditions, providing clarity and accountability in the ESG ratings ecosystem.

CSR amendments in pipeline (if any):

Upcoming CSR amendments may refine spending rules, reporting formats, or implementation mechanisms, aiming to improve transparency and impact measurement.

Shift towards integrated reporting and cross-referencing with global standards (ISSB, GRI):

Companies are increasingly aligning ESG disclosures with global frameworks like ISSB and GRI, facilitating comparability and supporting international investor expectations.

7. Case Examples

Example: Tata Steel – Integrating Energy Efficiency with Rule 8 and BRSR Principle 6

Context:

Tata Steel, a leading steel manufacturer, aligns its energy efficiency initiatives with both Rule 8 disclosures and BRSR Principle 6, focusing on environmental stewardship.

Implementation:

Rule 8 Disclosures: The company reports on energy conservation measures, technology absorption, and the impact on product cost reduction, as mandated by Rule 8.
BRSR Principle 6: Tata Steel aligns its energy efficiency data with Principle 6 metrics by reporting on specific energy consumption (SEC) and specific water consumption (SWC) figures, as recommended by the Centre for Science and Environment (CSE). (cseindia.org)

Outcome:
This dual reporting approach ensures compliance with statutory requirements while enhancing transparency and accountability in environmental performance.

8. Conclusion & Call to Action

ESG in India is already law-backed, not just a voluntary corporate initiative.
Companies that treat ESG as compliance only risk being reactive; those that embed ESG in governance will be future-ready.
Encourage proactive, integrated ESG strategies that speak to regulators, investors, and society.

Summary of the Article

Key ESG-Linked Provisions:

Section 134 & Rule 8: Board’s Report disclosures on energy, technology absorption, foreign exchange, and ESG-related initiatives.
Section 135 & CSR Rules: Mandatory 2% CSR spend, impact assessment, unspent CSR account, and reporting formats.
BRSR/BRSR Core: Top 1000 listed entities must file principle-wise ESG disclosures with phased assurance for KPIs.

Making ESG Reporting Strategic:

Link management KPIs to ESG targets—e.g., emissions reduction or workforce diversity.
Maintain audit-ready data trails for environmental and social metrics.
Engage assurance providers early to align on methodology and data requirements.

Upcoming ESG Developments in 2025:

SEBI easing BRSR Core value-chain reporting requirements to reduce compliance burden.
New rules allowing withdrawal of ESG ratings by rating providers under defined conditions.
Potential CSR amendments to improve transparency and impact measurement.
Increasing adoption of integrated reporting, cross-referencing global standards like ISSB and GRI.

Real-World Indian ESG Examples:

Tata Steel: Integrates energy efficiency data from Rule 8 into BRSR Principle 6 metrics, reporting on specific energy and water consumption. (Tata Steel Sustainability Report)
Infosys: Aligns CSR thematic areas such as education and rural development with NGRBC principles and SDGs, e.g., SDG 1 (No Poverty), SDG 2 (Zero Hunger). (Infosys CSR Report)

स्वधा स्तोत्र (Swadha Stotra)

September 06, 2025

स्वधा स्तोत्र तर्पण काल में स्वधा स्तोत्र का पाठ करने से पितरों को तृप्ति प्राप्त होतो है | समयाभाव के कारण यदि पूरा स्तोत्र का पाठ नहीं कर सकते है तब " स्वधा स्वधा स्वधा " ऐसा तीन बार उच्चारण करने से भी स्तोत्र पाठ का फल प्राप्त होता है | स्वधा स्तोत्र ब्रह्मोवाच – Brahmovach स्वधोच्चारणमात्रेण तीर्थस्नायी भवेन्नर:। मुच्यते सर्वपापेभ्यो वाजपेयफलं लभेत्।।1।। स्वधा स्वधा स्वधेत्येवं यदि वारत्रयं स्मरेत्। श्राद्धस्य फलमाप्नोति कालस्य तर्पणस्य च।।2।। श्राद्धकाले स्वधास्तोत्रं य: श्रृणोति समाहित:। लभेच्छ्राद्धशतानां च पुण्यमेव न संशय:।।3।। स्वधा स्वधा स्वधेत्येवं त्रिसन्ध्यं य: पठेन्नर:। प्रियां विनीतां स लभेत्साध्वीं पुत्रं गुणान्वितम्।।4।। पितृणां प्राणतुल्या त्वं द्विजजीवनरूपिणी। श्राद्धाधिष्ठातृदेवी च श्राद्धादीनां फलप्रदा।।5।। बहिर्गच्छ मन्मनस: पितृणां तुष्टिहेतवे। सम्प्रीतये द्विजातीनां गृहिणां वृद्धिहेतवे।।6।। नित्या त्वं नित्यस्वरूपासि गुणरूपासि सुव्रते। आविर्भावस्तिरोभाव: सृष्टौ च प्रलये तव।।7।। ऊँ स्वस्तिश्च नम: स्वाहा स्वधा त्वं दक्षिणा तथा। निरूपिताश्चतुर्वेदे षट् प्र...

ESG in India: A Companies Act Perspective Connecting Law, Governance & Sustainability