Walk into any Indian boardroom today and ESG is likely to come up within the first ten minutes. What started as a grudging nod to international investors has become something more urgent: a factor that determines whether companies can export to Europe, attract capital, or even retain customers.
The numbers reflect this shift. Consumer surveys consistently show that environmental performance influences purchasing decisions, while asset managers screen investments through ESG criteria. For Indian businesses, this represents both an opening and a challenge they can’t sidestep.
Winners and strugglers
Some companies have embraced the change. Adani Green Energy now scores 74 out of 100 on NSE’s sustainability ratings—the highest in India’s power sector. The company’s rapid expansion in renewables has helped it climb global rankings for clean energy performance.
But progress varies dramatically across the corporate landscape. While the Tatas and Adanis build dedicated ESG teams and set carbon targets, most small and medium enterprises lag behind. Industry estimates suggest fewer than one in three SMEs have defined sustainability goals, creating a two-tier system that could hurt India’s overall competitiveness.
The energy sector shows the most dramatic transformation. Power companies are racing to add renewable capacity while experimenting with everything from waste-to-energy projects to carbon capture technology. Converting agricultural waste into electricity has gained particular traction—a solution that addresses both emissions and rural poverty.
Europe forces the pace
Trade policy is accelerating the ESG adoption. Europe’s Carbon Border Adjustment Mechanism will start imposing tariffs of 20-35% on high-carbon imports from 2026, covering steel, aluminium, cement and fertilizers. Given that about a quarter of India’s $31bn worth of these exports already head to Europe, the financial impact could be substantial.
Indian officials have pushed back hard against what they see as protectionism disguised as climate action. Trade Secretary Sunil Barthwal recently called the mechanism “discriminatory” and warned it could derail ongoing free trade talks with the EU.
But the complaints haven’t slowed preparation. Steel companies like Tata Steel and JSW are scrambling to secure renewable energy contracts, while cement producers explore alternative fuels and production methods. The race is on to decarbonize before the European tariffs hit.
Regulators tighten the screws
India’s own rules are getting stricter. SEBI now requires the top 1,000 listed companies to file detailed sustainability reports, with enhanced requirements for the largest 250. From next fiscal year, these companies must have their ESG data independently verified—a requirement that will extend to 500 firms by 2025-26 and all 1,000 by 2026-27.
The regulator also wants companies to report on their supply chains, covering at least 75% of upstream and downstream partners by 2025-26. That’s going to force transparency into corners of Indian industry that have long remained opaque.
Beyond the compliance mindset
What’s encouraging is that ESG is no longer just the domain of corporate social responsibility teams. Finance directors are building climate risk into their projections. Legal departments are drafting governance frameworks. Technology heads are installing monitoring systems to track emissions and energy use.
Yet much of this remains reactive. Companies are responding to regulatory pressure and market access requirements rather than seeing ESG as a competitive advantage. For many, it’s still about avoiding penalties rather than capturing opportunities.
The real test ahead
India has committed to net-zero emissions by 2070—an ambitious target that requires massive corporate transformation. The question isn’t whether companies will adopt ESG practices, but whether they can do so quickly enough to remain competitive.
Early movers like Adani Green and Tata Power are already reaping rewards through easier access to international capital and premium valuations. Those that wait may find themselves locked out of global markets or forced to accept higher funding costs.
The ESG revolution in Indian boardrooms is real, but it’s still early days. The companies that get this right will shape India’s economic future. Those that don’t may not have much of a future at all.
The author is a retired executive director of ONGC and founder-editor of Newscript Energy World.