ESG Regulatory Landscape in India | Nainit Savla & Associates

ESG Regulatory Landscape in India

Q: What is the NGRBC and how does it relate to BRSR?

The NGRBC (2019) is India's overarching framework for responsible business conduct across nine principles. The BRSR is SEBI's operationalisation of NGRBC for listed company disclosure — structuring required disclosures around the same nine principles, effectively converting guidance into a regulatory obligation.

Q: How does the EU CBAM affect Indian exporters?

CBAM imposes a carbon price on EU imports of steel, cement, aluminium, fertilisers, hydrogen, and electricity. Indian exporters in these sectors must measure embedded emissions, prepare carbon intensity documentation, and from 2026 potentially pay the gap between India's and the EU's carbon price.

Q: What is Extended Producer Responsibility (EPR) in India?

EPR makes producers responsible for end-of-life product management — covering plastic packaging, e-waste, battery waste, tyre waste, and used oil. Producers must register on CPCB's EPR portal, set recycling targets, and procure EPR certificates from registered recyclers. Non-compliance attracts penalties.

Q: What are the new ESG-related disclosure requirements for company boards in India?

Beyond BRSR: Directors' Report must cover CSR; SEBI LODR requires board BRSR approval; boards must have or assign ESG oversight to a committee with disclosed mandate; TCFD-aligned climate risk disclosures are expected in the Annual Report's risk section.

Q: Does India have a carbon market or carbon pricing mechanism?

India is developing a Carbon Credit Trading Scheme (CCTS) under the Energy Conservation (Amendment) Act, 2022 — administered by BEE. The existing PAT scheme for energy efficiency certificates among Designated Consumers continues to operate. India's domestic carbon pricing will become relevant to CBAM calculations as the CCTS matures.

India's ESG regulatory landscape has transformed dramatically — driven by SEBI's progressive BRSR mandate, the Companies Act's CSR obligations, a suite of environmental laws, and the growing reach of international ESG regulations into Indian export markets and supply chains. For Indian businesses, ESG compliance is no longer a voluntary reputational exercise but an expanding web of hard legal, regulatory, and commercial obligations. Understanding the complete regulatory map — domestic and international — is the starting point for building a sustainable, future-proof ESG compliance programme.

SEBI BRSR Framework

SEBI's Business Responsibility and Sustainability Report — mandatory for top 1,000 listed companies; BRSR Core with third-party assurance expanding from the top 150 to top 1,000 over four years from FY 2023-24.

Companies Act — CSR (Section 135)

Mandatory 2% net profit CSR spending for companies meeting the threshold (₹500 crore net worth, ₹1,000 crore turnover, or ₹5 crore net profit) — with CSR policy, committee, and annual reporting obligations.

Environmental Laws

Environment Protection Act, Water Act, Air Act, Hazardous Waste Rules, and sector-specific environmental regulations — requiring environmental clearances, compliance reporting, and real-time pollution monitoring for manufacturing and industrial companies.

EU Carbon Border Adjustment Mechanism (CBAM)

The EU's CBAM imposes a carbon price on imports of steel, cement, aluminium, fertilisers, hydrogen, and electricity into the EU — requiring Indian exporters in these sectors to measure, report, and eventually pay for embedded carbon emissions.

RBI Sustainable Finance Guidelines

RBI's climate risk and sustainable finance guidelines for Indian banks — requiring banks to assess climate-related risks in their lending portfolios and develop strategies for green finance and climate risk management.

International Supply Chain ESG

EU Corporate Sustainability Due Diligence Directive (CSDDD), German Supply Chain Act, and other international regulations requiring large companies to assess and address human rights and environmental risks in their global supply chains — directly affecting Indian suppliers.

India's National ESG Policy Framework

At the national level, India's ESG regulatory architecture is built around several pillars: SEBI's BRSR mandate for the capital markets; Section 135 of the Companies Act for CSR spending; the National Guidelines on Responsible Business Conduct (NGRBC) issued by the Ministry of Corporate Affairs — which form the nine-principle backbone of the BRSR; India's Nationally Determined Contributions (NDCs) under the Paris Agreement, committing India to reaching 50% non-fossil fuel power by 2030 and net-zero by 2070; and the Energy Conservation Act and related regulations driving energy efficiency and renewable energy targets in the industrial sector.

Key ESG Regulatory Obligations — Quick Reference

SEBI BRSR — annual filing mandatory for top 1,000 listed companies; BRSR Core assurance expanding progressively
Companies Act Section 135 — CSR spending and reporting for eligible companies
Companies Act Section 166 — directors' duty to act in good faith for all stakeholders (not just shareholders)
Environmental Clearances — required under EIA Notification 2006 for specified industrial and infrastructure projects
Consent to Operate — State Pollution Control Board consents for air and water emissions
Extended Producer Responsibility (EPR) — mandatory for producers of plastic, e-waste, battery, tyre, and oil waste
Energy Audit — mandatory for designated energy consumers under the Energy Conservation Act
EU CBAM — carbon price on Indian exports of steel, cement, aluminium, fertilisers to the EU from 2026

Frequently Asked Questions

What is the NGRBC and how does it relate to BRSR?

The National Guidelines on Responsible Business Conduct (NGRBC) — issued by the Ministry of Corporate Affairs in 2019 — are India's overarching framework for responsible business behaviour, covering nine principles: ethics and transparency, product safety and sustainability, employee wellbeing, stakeholder engagement, human rights, environment, policy advocacy, inclusive growth, and customer responsibility. The BRSR is SEBI's operationalisation of the NGRBC for listed company disclosure — it structures the required disclosures around the same nine principles, asking companies to report on their policies, processes, and performance against each NGRBC principle. The BRSR effectively converts NGRBC from a guidance document into a disclosure obligation.

How does the EU CBAM affect Indian exporters?

The EU Carbon Border Adjustment Mechanism (CBAM) — which entered a transitional reporting phase in October 2023 and will begin imposing actual carbon costs from 2026 — requires importers into the EU to pay for the carbon embedded in imports of steel, cement, aluminium, fertilisers, hydrogen, and electricity. For Indian exporters in these sectors, CBAM means: (a) measuring and reporting embedded GHG emissions in exported products at the production level; (b) from 2026, potentially paying the difference between the carbon price paid in India and the EU's carbon price (if India's domestic carbon price is lower); and (c) preparing detailed production-level carbon intensity documentation that satisfies EU CBAM verification requirements. CBAM creates a direct financial incentive for Indian industrial exporters to reduce their production carbon intensity — or face a competitive disadvantage against lower-carbon European producers.

What is Extended Producer Responsibility (EPR) in India?

Extended Producer Responsibility (EPR) is a policy approach that makes producers responsible for the end-of-life management of the products they place on the market — covering plastic packaging, e-waste (electrical and electronic equipment), battery waste, tyre waste, and used oil. Under India's EPR regime, producers, importers, and brand owners (PIBOs) must register on the CPCB EPR portal, set annual collection and recycling targets, procure EPR certificates from registered recyclers to demonstrate compliance, and file annual returns. Non-compliance attracts penalties and can result in suspension of operations. EPR compliance is an increasingly material ESG obligation for consumer goods, electronics, automotive, and packaging companies operating in India.

What are the new ESG-related disclosure requirements for company boards in India?

Beyond BRSR, Indian company boards face expanding ESG disclosure requirements: (a) the Companies Act (Amendment) Rules 2021 require the Directors' Report to include a statement on CSR activities; (b) SEBI's Listing Obligations and Disclosure Requirements (LODR) require the board to approve the BRSR before it is filed; (c) SEBI has issued guidelines requiring listed companies to have a board-level ESG or sustainability committee (or assign ESG oversight to an existing board committee) — with the committee's ESG mandate disclosed in the annual report; and (d) TCFD-aligned climate risk disclosures are increasingly expected in the board's narrative on key risks in the annual report. Board-level accountability for ESG is being progressively strengthened across India's listed company universe.

Does India have a carbon market or carbon pricing mechanism?

India is developing a domestic carbon market through the Carbon Credit Trading Scheme (CCTS) framework — announced under the Energy Conservation (Amendment) Act, 2022. The CCTS is designed to create a mandatory carbon trading market for Obligated Entities (large energy-consuming industries) and a voluntary market for other participants. The Bureau of Energy Efficiency (BEE) is the designated administrator. The CCTS is in development — detailed regulations and operational rules are being finalised. In parallel, India's existing Perform, Achieve, and Trade (PAT) scheme — a market-based mechanism for energy efficiency certificates among Designated Consumers under the Energy Conservation Act — continues to operate. India's domestic carbon pricing is likely to become relevant to CBAM calculations for Indian exporters to the EU as the scheme matures.

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