Corporate Governance And ESG Compliance In India: Legal Challenges And Future Prospects
Anshika Kapoor, B.B.A. LL.B., Bharati Vidyapeeth University
ABSTRACT
Corporate governance and environmental, social, and governance compliance have undergone a structural transformation in India over the decade since the enactment of the Companies Act, 2013. What began as a legislative effort to modernise company law following the corporate fraud revelations of the Satyam scandal has evolved into a comprehensive framework encompassing board composition and independence requirements, mandatory corporate social responsibility expenditure, related party transaction governance, auditor independence obligations, and most recently a detailed ESG disclosure architecture administered by the Securities and Exchange Board of India through the Business Responsibility and Sustainability Report regime. This paper offers a systematic legal analysis of this framework across its principal dimensions, examining the statutory foundations in the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the role of the National Guidelines on Responsible Business Conduct, the BRSR Core assurance framework introduced in 2023, and the emerging regulatory treatment of ESG rating providers. It identifies the principal legal challenges that the framework presents: the tension between mandatory CSR and the legal character of corporate obligations, the structural limitations of independent director requirements in a promoter-dominated corporate landscape, the inconsistency between domestic disclosure standards and the ISSB framework toward which India is converging, the compliance burden that cascading ESG disclosure obligations place on value chain participants, and the enforcement gaps that persist in insider trading, related party transactions, and audit integrity. The paper then examines future prospects, including the likely domestic adoption of IFRS Sustainability Standards, the implications of the European Corporate Sustainability Due Diligence Directive for Indian companies with European operations or supply chain relationships, and the business and human rights dimension introduced by India's National Action Plan. It argues that the legal architecture of corporate governance and ESG compliance in India is substantially in place but requires deeper institutional capacity, more consistent enforcement, and a clearer resolution of the tension between prescriptive compliance and genuine governance quality.
Keywords: Corporate Governance; ESG Compliance; Companies Act 2013; SEBI LODR; BRSR; Independent Directors; CSR; Sustainability Reporting; India.
