Decoding ESG for Indian Industries: What It Means and How to Start

Environmental, Social, and Governance (ESG) for Indian Industries

Environmental, Social, and Governance (ESG) for Indian industries are no longer just a buzzword—they are a business imperative. What once began as a voluntary effort has now evolved into a structured compliance framework, with increasing mandates from SEBI, RBI, and other regulatory bodies. For Indian companies, ESG is not only about fulfilling legal obligations but also about building investor trust, reducing operational risks, and driving long-term value. As industries across sectors—from manufacturing and infrastructure to IT and FMCG—face mounting pressure to disclose ESG metrics, aligning business strategies with ESG goals is vital. Understanding ESG for Indian Industries is now central to staying relevant, resilient, and responsible in a rapidly changing economic landscape.

Understanding ESG for Indian Industries: The Foundation

ESG for Indian Industries encompasses three critical pillars that measure corporate sustainability and ethical impact. The Environmental component focuses on climate change mitigation, resource efficiency, and waste management. Social factors examine employee welfare, community engagement, and human rights practices. Governance evaluates board diversity, executive compensation, and transparency in business operations.

In India, ESGs are not regulated by a single law or statute; however, they fall under various legislations, including the Companies Act 2013, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), and others. This multi-regulatory approach creates a comprehensive framework that addresses various aspects of sustainable business practices.

Current ESG Regulatory Framework for Indian Industries

BRSR Reporting Requirements

SEBI mandates that the 1,000 largest listed companies by market capitalisation must mandatorily file BRSR reports as part of their annual reports from FY 2022-23 onwards. The Business Responsibility and Sustainability Reporting (BRSR) framework represents India's commitment to standardised ESG disclosures.

The BRSR Core framework introduces enhanced requirements for the top companies. From FY2023-24, the top 150 listed entities must comply with the nine parameters in the BRSR core framework. These parameters include metrics on energy consumption, water usage, waste generation, and social impact indicators.

Expanding Scope of ESG Compliance

Recent regulatory developments show the expanding scope of ESG requirements. Per the BRSR Core Circular, the top 250 listed companies by market capitalisation are required to: 
(a) disclose Scope 3 GHG emissions on a comply-or-explain basis from financial year 2024-2025; and 
(b) meet assurance requirements for Scope 3 GHG emissions on a comply-or-explain basis

Looking ahead, ESG reporting for value chain partners will now be voluntary for the top 250 listed entities from the financial year 2025-26, which began on April 1 and will end on March 31 of the following year. This expansion demonstrates the regulatory focus on comprehensive supply chain sustainability.

Why ESG Matters for Indian Industries: Business Case

Risk Management and Compliance

ESG frameworks help Indian industries identify and mitigate operational, financial, and reputational risks. Companies with robust ESG practices demonstrate better crisis resilience and stakeholder trust. The regulatory landscape continues evolving, making proactive ESG adoption essential for avoiding compliance penalties.

Access to Capital and Investment

International and domestic investors increasingly prioritise ESG-compliant companies. Green bonds, sustainability-linked loans, and ESG-focused funds provide preferential financing terms for companies with strong ESG credentials. This shift in investment patterns makes ESG compliance a competitive advantage in capital markets.

Operational Efficiency and Cost Reduction

ESG initiatives often translate into operational improvements. Energy efficiency programs reduce utility costs, waste reduction initiatives minimise disposal expenses, and employee wellness programs enhance productivity. These tangible benefits make ESG implementation a strategic business decision rather than a mere compliance activity.

Getting Started with ESG Implementation for Indian Industries

Phase 1: Assessment and Gap Analysis

• Begin by conducting a comprehensive ESG assessment against current regulatory requirements and industry best practices. Identify gaps in data collection, reporting systems, and governance structures. Map existing sustainability initiatives to ESG frameworks to understand your starting position.

• Establish baseline metrics for key performance indicators across environmental, social, and governance dimensions. This foundation enables progress tracking and informed decision-making throughout the implementation process.

Phase 2: Framework Development and Policy Creation

• Develop an ESG strategy aligned with business objectives and regulatory requirements. Develop policies that encompass environmental management, social responsibility, and governance practices. Ensure these policies reflect the specific challenges and opportunities within Indian industrial contexts.

• Implement data collection systems to capture ESG metrics systematically. Consider investing in ESG management software to streamline reporting processes and ensure data accuracy. Companies can implement BRSR by establishing ESG policies, tracking sustainability metrics, and adopting ESG data management tools.

Phase 3: Implementation and Monitoring

• Execute ESG initiatives across all business operations, starting with high-impact, low-cost interventions. Establish clear responsibilities and accountability structures for ESG performance. Regular monitoring and reporting ensure continuous improvement and regulatory compliance.

• Engage stakeholders throughout the implementation process, including employees, customers, suppliers, and community members. Their feedback provides valuable insights for refining ESG strategies and enhancing program effectiveness.

Overcoming Common Challenges in ESG Implementation

Data Collection and Quality Management

Many Indian industries struggle with inconsistent data collection and quality issues. Establish standardised data collection protocols and invest in training programs for responsible personnel. Consider third-party verification for critical metrics to enhance credibility.

Resource Allocation and Budget Constraints

ESG implementation requires significant initial investment in systems, training, and process changes. Develop a phased approach that prioritises high-impact initiatives and demonstrates early wins to secure continued investment. Explore government incentives and grants supporting ESG initiatives.

Integration with Existing Systems

Legacy systems often lack capabilities for comprehensive ESG data management. Plan system upgrades carefully, considering integration requirements and data migration challenges. Cloud-based ESG platforms offer scalable solutions for growing businesses.

Future Outlook: ESG Trends for Indian Industries

The ESG landscape continues evolving rapidly, with new regulations and expectations emerging regularly. Global momentum behind ESG regulations continues to accelerate – and in May 2025 alone, 264 regulatory changes were recorded across sustainability reporting, climate-related disclosures, due diligence, and labour practices.

Indian industries must prepare for increasingly stringent requirements, including mandatory climate disclosures, supply chain due diligence, and enhanced social impact reporting. Early adoption of comprehensive ESG frameworks positions companies advantageously for future regulatory changes.

Your Partner in ESG Excellence

Successfully implementing ESG for Indian Industries requires expertise, resources, and strategic guidance. The complexity of regulatory requirements and the need for systematic implementation make professional support invaluable.

HECS offers comprehensive ESG consulting services tailored for Indian industries. Our team of experts provides end-to-end support, from initial assessment to ongoing compliance management. With a deep understanding of Indian regulatory requirements and industry-specific challenges, HECS helps organisations transform ESG compliance from a burden into a competitive advantage.

Contact HECS today to begin your ESG journey and secure your organisation's sustainable future in India's evolving business landscape.