ESG Integration In India: Challenges, Progress, And Future Directions

Kavya Agrawal, Jindal Global Law School, Sonipat

ABSTRACT

Environmental, social, and governance (ESG) is becoming an important aspect of corporate governance and responsible investing. Emergent ESG regulations have placed new demands on companies, investors and regulators alike. Corporations are now expected to abide by these obligations and consider their environmental impact, social responsibilities, and governance frameworks. Due to this global traction, it is important to look at the importance of ESG in India. Prevalent corporate governance debates shed light on the need for prioritizing long-term sustainable value rather than the pursuit of profits merely for shareholder’s benefit. We are witnessing a departure from the traditional shareholder- centric approach that Corporate Social Responsibility (CSR) initiatives carry. Owing to its largely philanthropic tilt, the CSR regime in India fails to focus on the negative externalities generated by the operations of companies. Given the conceptual dissatisfaction surrounding CSR in India, the emerging trend of ESG takes on great importance. Unlike CSR, ESG comes up with a more holistic focus on all stakeholders. The scope of ESG is wide enough to include the CSR policies of companies within it. The transition from CSR to ESG is not merely a regulatory evolution but a fundamental change in how companies operate and are held accountable. While the Companies Act, 2013 addresses certain aspects of environmental and social responsibility, a comprehensive ESG framework remains absent. However, SEBI's mandate for top 1000 listed companies to disclose ESG information signifies a step forward. This paper seeks to analyse the current state of ESG implementation in India, identifying the challenges and opportunities it presents, and mainly focus on overlapping jurisdiction between NGT and NCLT. By understanding the interplay between ESG and corporate governance, policymakers, investors, and businesses can work together to create a more sustainable and responsible corporate India. As India ascends on the global stage, the systematic regulation of ESG principles will be crucial for long-term value creation and ethical business conduct.

Keywords: ESG, CSR, jurisdiction, NGT, NCLT, value creation, sustainability, directors’ duty