ESG and Board Accountability: India’s Evolving Corporate Governance Landscape

In India, integrating Environmental, Social, and Governance (ESG) into corporate governance has become more than a trend—it’s a regulatory imperative. Here’s how the legal and policy framework is evolving:

Section 166(2) of the Companies Act, 2013

• Directors must act in good faith for the company’s objectives, and keep in mind not only shareholders and employees, but also the community and the environment.

MCA’s National Guidelines on Responsible Business Conduct (NGRBC), 2019

• Encourages ethical, transparent, and accountable governance
• Stresses ESG integration into core operations and long-term strategy
• Recognises environmental and social responsibility as the core business duties

SEBI’s BRSR Framework (Business Responsibility and Sustainability Reporting)

• Mandatory for top 1000 listed companies, based on market capitalisation, BRSR requires detailed ESG disclosures on:
• Environmental performance
• Social impact
• Governance mechanisms
• The Board plays a key role in setting ESG goals and targets, and ensuring ESG compliance.

What Does This Mean for Boards?

• They are stewards of both financial and sustainable performance, and are answerable not only to their shareholders, but also to stakeholders, including employees, consumers and communities.
• They play a crucial role in ensuring that BRSR does not become a mere reporting exercise, but a driver of positive change within the organisation, as well as the broader impact of the company on society and the environment.
• They must, therefore, lead on ESG risk assessment and management, ESG compliance, and long-term value creation.

ESG is not a tick-box exercise to be completed — it is a cornerstone of resilient, sustainable and responsible business strategy and growth.

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