ESG governance has emerged as a central concern in Indian corporate regulation, particularly for listed companies. In India, the regulatory approach has largely been disclosure-driven rather than based on a standalone substantive ESG code. The most important development in this regard is SEBI’s Business Responsibility and Sustainability Reporting (BRSR) framework, introduced for the top listed entities to standardize sustainability-related disclosures.

The core regulatory assumption behind BRSR is that greater transparency will improve market discipline and push boards to internalize environmental, social, and governance risks. However, this assumption raises an important question, can disclosure alone produce genuine board accountability, or does it merely encourage procedural compliance and ‘greenwashing’?

India’s ESG Regulatory Framework

India does not yet have a single consolidated ESG statute. Instead, ESG obligations arise from a combination of company law, securities regulation, and governance frameworks. At the company law level, section 166 of the Companies Act, 2013 is particularly significant. It requires directors to act in good faith in the best interests of the company, its employees, shareholders, the community, and the environment. This provision offers an important statutory basis for treating ESG issues as part of directors’ legal responsibilities rather than as matters of voluntary corporate ethics. In addition, section 135 institutionalizes corporate social responsibility for certain companies, though CSR should not be conflated with broader ESG governance.

For listed entities, the more relevant framework is the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations). Under this architecture, SEBI replaced the earlier Business Responsibility Report with the more detailed BRSR, based on the National Guidelines on Responsible Business Conduct (NGRBC). BRSR requires structured disclosures on governance, environmental impact, workforce practices, stakeholder engagement, and sustainability performance.

This framework reflects a regulatory shift, ESG is increasingly being treated as a governance and disclosure issue rather than merely a reputational concern.

BRSR and the Logic of Disclosure-Based Regulation

The BRSR framework is premised on the idea that standardized disclosure can improve comparability, reduce information asymmetry, and enable investors and other stakeholders to assess sustainability performance more effectively. In principle, this can influence board behavior in three ways.

First, it compels companies to develop internal systems for collecting ESG-related data. Secondly, it places sustainability information into the public domain, thereby increasing reputational and investor pressure. Thirdly, it gives boards a formal basis to discuss risks that may previously have been treated as non-financial or peripheral.

These are important gains. BRSR has unquestionably improved the language, visibility, and structure of ESG reporting in India. It has also encouraged greater stakeholder scrutiny and made sustainability reporting a board-level subject, at least in formal terms.

However, disclosure-based regulation has inherent limitations. Transparency does not automatically lead to accountability. A company may publish a detailed BRSR while continuing to treat ESG as a compliance exercise rather than as an element of business strategy, risk management, or board oversight. In such cases, the reporting framework produces form without substance.

The Risk of Procedural Compliance and Greenwashing

The principal weakness of a disclosure-led ESG model is that it can incentivize presentation rather than performance. Companies may produce detailed sustainability statements, policies, and targets without materially changing operational practices or governance structures. This creates a risk of procedural compliance, where the board oversees the preparation of disclosures but not the underlying ESG risks themselves.

The related danger is greenwashing. Where sustainability claims are vague, selective, self-reported, or weakly verified, disclosure can become a tool for impression management. This is particularly problematic where companies highlight aspirational commitments while downplaying material adverse impacts. In such situations, the market receives disclosure, but not necessarily reliable accountability.

The issue, therefore, is not whether companies disclose ESG information, but whether such disclosure is sufficiently rigorous, material, and connected to actual governance processes. Unless ESG reporting is tied to internal controls, risk oversight, and decision-making, BRSR may remain an exercise in regulatory optics.

Board Accountability: Directors, Oversight and ESG

Under Indian law, the board cannot plausibly treat ESG as external to its governance role. Section 166 of the Companies Act, 2013 already provides a basis for recognising environmental and stakeholder concerns as relevant to directors’ duties. Yet the legal framework remains broad and principle based. It does not clearly prescribe how boards must identify, monitor, and respond to ESG risks.

This creates an accountability gap. Directors are expected to consider stakeholder and environmental interests, but the law does not yet impose sufficiently clear governance processes for doing so. As a result, ESG often enters the boardroom through disclosure obligations rather than through enforceable oversight duties.

Role of Independent Directors

Independent directors are critical in this setting. Their role should extend beyond passive review of sustainability disclosures. They should question management assumptions, test the materiality of ESG risks, and ensure that public disclosures are not overstated or misleading. They are especially important in checking whether ESG commitments are integrated into strategy, supply chain oversight, workforce policy, and long-term risk assessment.

However, their effectiveness is often limited by information asymmetry, lack of technical ESG expertise, and over-reliance on management-prepared reporting. Without stronger internal reporting systems and board-level ESG capacity, independent directors may be unable to provide meaningful oversight.

Role of the Risk Management Committee

The Risk Management Committee is the most appropriate board committee for ESG oversight in listed companies. ESG concerns, particularly climate risk, labour issues, governance failures, supply chain disruption, and regulatory exposure, are no longer peripheral ethical questions, they are enterprise risks.

Within the LODR framework, the Risk Management Committee can play a meaningful role in:

identifying material ESG risks;

integrating ESG into enterprise risk management;

reviewing internal metrics and controls;

escalating significant ESG issues to the board; and

testing whether BRSR disclosures reflect actual risk assessment.

Yet, in practice, this depends heavily on company-specific committee mandates. Indian regulation does not yet require a sufficiently detailed committee level ESG oversight framework. As a result, ESG may still be addressed inconsistently across listed entities.

Is Disclosure Enough?

BRSR has improved transparency and has helped mainstream ESG discourse in Indian corporate governance. It has also created a more structured basis for investor scrutiny. But disclosure alone is not enough to ensure real board accountability.

A purely disclosure-based model assumes that market discipline will convert transparency into governance reform. That assumption is only partially valid. In reality, disclosure can reveal risks without ensuring that boards respond to them adequately. It can also produce boilerplate reporting, selective narrative framing, and compliance formalism.

For ESG governance to become meaningful, disclosure must be supplemented by stronger accountability mechanisms. These may include:

clearer allocation of board and committee responsibility for ESG oversight;

stronger verification or assurance requirements for key sustainability disclosures;

clearer linkage between material ESG failures and directors’ oversight obligations; and

closer scrutiny of misleading or exaggerated sustainability claims.

India’s ESG regulatory framework has made important progress by placing sustainability disclosure within the mainstream of listed-company governance. SEBI’s BRSR regime has improved transparency, comparability, and stakeholder visibility. However, disclosure is only a starting point. It cannot, by itself, guarantee that boards are meaningfully governing ESG risks.

If ESG is to move beyond procedural compliance, India will need a more robust governance architecture—one that supplements disclosure with clearer board responsibility, stronger committee oversight, and credible mechanisms to curb greenwashing. The next phase of Indian ESG regulation should therefore not abandon disclosure but build on it. Real board accountability requires not just what companies report, but how boards govern.

From Transparency to Accountability: Reassessing ESG Governance in India’s Listed Companies