India does not have one ESG regulator. It has four, each operating with distinct responsibilities and limited cross coordination. The Securities and Exchange Board of India (SEBI) mandates sustainability disclosures through the BRSR framework. The Ministry of Corporate Affairs enforces CSR spending under the Companies Act 2013. The Ministry of Environment, Forest and Climate Change (MoEFCC) controls environmental clearances and the domestic carbon market. The RBI has introduced separate climate risk disclosure norms for financial institutions. Each applies its own standards, timelines and definitions of compliance.
The regulatory intent is commendable. SEBI’s BRSR Core now demands third party verified data on emissions, water use, diversity and workplace safety from the top 150 listed entities. However, the enforcement mechanism remains a work in progress. Non compliance triggers a nominal daily penalty—modest enough to be absorbed as a cost of doing business rather than act as a deterrent. Provisions for director accountability or liability for material misrepresentation are yet to be introduced. As a result, companies tend to optimise filing rather than performance, fostering a compliance culture that prioritises process over substance—a gap the regulatory framework, in its current form, is still evolving to address.
The domestic stakes are equally significant. India’s headline climate commitments—net zero by 2070 and 50% non fossil energy capacity by 2030—derive their credibility from the quality of corporate reporting that underpins them. Without reliable data flowing from the ground up, these targets risk remaining aspirational rather than actionable. Addressing this compliance gap is not a regulatory hygiene exercise. It is a precondition for India’s relevance in the global sustainable finance landscape and for ensuring that its corporate sector becomes an active participant in, rather than a bystander to, one of the largest capital reallocations of our time. Nearly 40% of ESG audit time is spent cleaning data, highlighting how far corporate readiness still lags regulatory ambition.
The scope has expanded rapidly. From FY 2022 23, the top 1,000 listed companies by market capitalisation are required to file annual BRSR reports covering nine principles of responsible business conduct. The BRSR Core, introduced in 2023, raises the bar with stricter quantitative benchmarks and external accountability mechanisms. From FY 2025 26, the reporting perimeter widens again as the top 250 companies must disclose ESG performance across their value chains, covering partners that account for 75% of procurement and sales value. The regulatory trajectory is clear and accelerating. India wants its corporate disclosure standards to match global benchmarks. The question is whether its companies can keep pace.
The numbers show the scale of the problem. While 88% of mid market companies acknowledge that ESG regulations will impact their business, only 27% are adequately prepared. Most continue to rely on spreadsheet based reporting, a method that fundamentally fails the standard of reasonable assurance SEBI now demands.
An analysis of NSE BRSR filings reveals how deep the deficit runs. Of 597 companies reviewed, approximately 500 still depend on manual processes for ESG reporting. A staggering 983 listed companies have no identified assurance provider on record. Ninety eight companies remain non compliant, with 69% of that non compliance concentrated in just nine industries. These are not theoretical estimates; they are identifiable companies operating without the infrastructure regulators and investors now expect. With Scope 3 requirements cascading compliance obligations onto thousands of unlisted suppliers—and India still lacking a standardised ESG assurance accreditation framework—the gap is not closing. It is multiplying.
The impact of messy data on audit processes
Today, ESG audit engagements are consumed more by data remediation than by performance evaluation. Auditors spend time chasing source documents, reconciling inconsistent units, and correcting manual entry errors rather than assessing actual sustainability outcomes. When assurance providers cannot trace a reported number back to a reliable source, the entire filing becomes vulnerable to regulatory and investor challenge.
The investor consequences are already visible. Global fund managers now apply hard exclusion filters, and Indian companies with unverifiable disclosures are being passed over in favour of peers in Southeast Asia and the Middle East. For mid market firms seeking foreign institutional investment or preparing for IPOs, a weak ESG track record is no longer a footnote—it is a dealbreaker.
The ripple effects extend beyond balance sheets. Underreported emissions, undisclosed safety gaps and opaque supply chains erode public trust not just in individual firms but in India’s broader regulatory apparatus. Bridging the compliance gap is therefore not merely a corporate obligation—it is a matter of public interest.
Cloud based ESG data warehouses with API connectors can centralise data that currently sits in silos. IoT enabled sensors can feed real time emissions and resource use data directly into reporting platforms, eliminating manual errors. AI driven tools can auto extract ESG data from source documents, detect anomalies and generate audit ready evidence trails. The shift from periodic, manual compilation to continuous, intelligent data capture transforms ESG reporting from a compliance burden into an operational discipline.
Technology and regulation can set the direction, but without widespread ESG literacy, adoption will remain shallow. Most mid market companies lack dedicated sustainability teams, board members are unfamiliar with their fiduciary exposure and operational teams have no training on assurance readiness.
Closing this gap demands institutional collaboration. Industry bodies like NASSCOM, CII and FICCI can drive sector specific programmes. ICAI and ICSI can embed BRSR compliance into professional training curricula. Business schools can equip leaders to view ESG as a driver of long term value, not a regulatory checkbox. When awareness permeates every level of an organisation, compliance becomes embedded in the way the business operates.
First Published: Mar 23, 2026, 13:14
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