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Exploring the Relationship Between Norms Governing Environment, Society, and Governance vs. Corporate Social Responsibility in India: Importance of Compliance for the Economy and the Potential of ESG for International Supply Chains.”

By: Jishaant

Abstract – The essay discusses the importance of companies considering environmental, social, and governance factors in their decision-making processes. It emphasises the need for executives and owners to take responsibility for achieving ESG goals, rather than relying solely on investment professionals. The essay examines how India has developed ESG disclosure laws and how businesses in India have promoted diversity, reduced emissions, and improved governance. It highlights the benefits of ESG practices for businesses, including improving their reputation, attracting investors, and reducing operational costs. The essay concludes by discussing a circular issued by SEBI in 2017 that establishes disclosure criteria for ESG-compliant projects and creates a legal framework for the issuance of green debt securities in India.

The relationship between norms governing the environment, society, and governance and corporate social responsibility (CSR) is crucial for sustainable economic development in India. Compliance with these norms is necessary to ensure the protection of the environment, the promotion of social justice, and the effective functioning of governance mechanisms. At the same time, CSR can help to address these issues by encouraging corporations to act responsibly and contribute to social and environmental well-being. 

 In recent years, India has witnessed significant progress in the adoption of sustainability practices by corporations. Many Indian companies have embraced the concept of ESG (Environmental, Social, and Governance) as a means of improving their sustainability performance. ESG practices involve incorporating environmental, social, and governance considerations into a company’s decision-making processes, operations, and reporting.

The principal’s perspective on sustainability and ESG

The burden of accomplishing ESG goals cannot be placed entirely in the hands of investment experts who act as agents allocating funds because ESG investing does not always live up to its promise. As principals in the productive economy, capital-owning business owners and executives must instead take the reins.

Sustainability should not be assigned to a defined “sustainability officer” within organisations. When this occurs, the principal-agent problem reappears because people in the organisation may feel as though sustainability is being handled by someone else and the problem is thus solved. Instead, the approach taken by the principal about ESG, and sustainability calls for these factors to be incorporated into the regular flow of business decision-making.

Finding lucrative solutions to issues should be the aim of all businesses. This overarching objective will direct corporate executives to concentrate on creating long-term value while incorporating environmental, social, and governance factors into the process of making business decisions. Businesses that follow this guiding principle and involve all leaders, not just the appointed “sustainability officer,” will have a much higher positive influence on sustainability than ESG investing.

India’s development of ESG disclosures

One of the first ESG disclosure requirements for businesses was imposed by the Companies Act of 2013. Companies are required to submit an annual financial statement and a report on energy conservation by their board of directors under Section 134(m). The Companies (Accounts) Rules, 2014, Rule 8(3)(A), which requires the board to give information regarding energy conservation, provides more specifics about this requirement.

In addition, corporations are required under Regulation 34(3) of the SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015 (“LODR Regulations”) to disclose opportunities, threats, risks, and concerns as part of their annual reports. Nevertheless, these disclosure requirements do not force corporations to monitor their progress over time or to provide information about the measurements and procedures they use to identify such opportunities or hazards.

Some of the key ESG-related initiatives that Indian companies have undertaken include reducing greenhouse gas emissions, improving energy efficiency, promoting diversity and inclusion, enhancing labour practices, and strengthening corporate governance. Additionally, a growing number of companies are adopting sustainability reporting frameworks, such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), to provide stakeholders with more comprehensive information about their ESG practices.

India transforms its ESG landscape to be future-ready ESG practices that have the potential to benefit Indian companies in several ways. For example, by reducing their environmental footprint and improving their social and governance practices, companies can enhance their reputation, attract investors, and improve their long-term sustainability. ESG practices can also help companies reduce operational costs, identify new business opportunities, and build resilience in the face of climate change and other sustainability challenges.

When companies prioritise environmental, social, and governance (ESG) factors in their decision-making and operations, it can have positive impacts on the nation as a whole in several ways. Environmental benefits: Companies that prioritise ESG factors are more likely to adopt sustainable business practices, such as reducing carbon emissions, minimising waste, and conserving natural resources. This can help to mitigate climate change and protect the environment, which benefits everyone.Social benefits, Companies that prioritise ESG factors are more likely to prioritise the well-being of their employees, customers, and the communities in which they operate. This can include paying fair wages, providing safe working conditions, and supporting community development initiatives. This can help to promote social equity and reduce inequality.Economic benefits, Companies that prioritise ESG factors are often better positioned to manage risks and capitalise on opportunities in a changing business landscape. They may be more resilient to economic shocks, have stronger relationships with stakeholders, and attract and retain talented employees. This can contribute to the long-term health and prosperity of the nation’s economy.

A circular on “Disclosure Requirements for Issue and Listing of Green Debt Securities” was released by SEBI in 2017 with the goal of establishing the legal framework for the issuing of green debt securities in India and fostering investor confidence. It includes a list of disclosures that an issuer must include in its offer document before and after the start of a project financed by green debt and amends the SEBI (Issue and Listing of Debt Securities) Regulation, 2008. To secure the funding set aside for ESG-compliant projects in the areas of renewable and sustainable energy, clean transportation, sustainable water management, climate change adaptation, energy efficiency, sustainable waste management, sustainable land use, and biodiversity preservation, additional disclosure requirements have been established.

Why governing the environment, society, and governance is crucial for the Indian economy?

 There are several reasons why compliance with norms governing the environment, society, and governance is crucial for the Indian economy. Firstly, India’s economic growth has been accompanied by significant environmental degradation, Air Pollution,WaterPollution, Noise Pollution, Rising population, Affluent consumption, Illiteracy, Industrialization, Urbanization, Reduction of forest cover, Global warming standard which poses a threat to the country’s natural resources and the health of its citizens. Compliance with environmental norms is necessary to mitigate these risks12 top enterprise risk management trends in 2023 like Environmental risk mitigation,  adopting sustainable practices, such as reducing carbon emissions and minimising waste, companies can mitigate risks related to climate change, such as regulatory fines and reputational damage. This can also help companies to avoid disruptions to their supply chains and reduce their exposure to resource price volatility.

Social risk mitigation, prioritising the well-being of employees, customers, and the communities in which they operate, companies can mitigate risks related to labour disputes, boycotts, and negative media coverage. This can also help to build trust with stakeholders and improve brand reputation. Governance risk mitigation,  implementing strong governance practices, such as transparent accounting and reporting, companies can mitigate risks related to fraud, corruption, and regulatory non-compliance. This can also help to improve investor confidence and access to capital. Access to capital, Investors are increasingly prioritising ESG factors when making investment decisions. By adopting ESG norms, companies can attract more investment, reduce their cost of capital, and improve their credit rating. Innovation and efficiency, adopting sustainable practices, companies can drive innovation and improve efficiency, leading to cost savings and increased profitability. For example, reducing waste can lead to lower production costs, while using renewable energy can lead to long-term cost savings.

Secondly, India is a diverse country with significant social and economic disparities. Compliance with social norms is crucial to ensure that the benefits of economic growth are shared equitably across all sections of society. Finally, effective governance is necessary to ensure that the rule of law is upheld and that businesses operate in a transparent and accountable manner. Compliance with governance norms is crucial to promote trust in institutions and foster a favourable business environment. 

Corporate social responsibility can play a significant role in promoting compliance with these norms. By voluntarily taking steps to address environmental and social issues, companies can contribute to sustainable economic development while also enhancing their reputation and brand value. CSR can also help to build trust between companies and their stakeholders, including customers, investors, and communities. Furthermore, ESG practices can improve the sustainability performance of companies and make them more attractive to international supply chains. As global companies increasingly adopt ESG criteria in their supply chain management, Indian companies that adopt ESG practices will be better positioned to compete in international markets.


 In conclusion, compliance with norms governing the environment, society, and governance is crucial for sustainable economic development in India. Corporate social responsibility and ESG practices can play a significant role in promoting compliance and improving the sustainability performance of Indian companies. The potential of ESG for international supply chains underscores the importance of adopting sustainability practices for the long-term competitiveness of Indian businesses in global markets.


Jishaant is a Second Year at Jindal School of Environment and Sustainability pursuing the course BA Hons and is deeply interested in environmental Economics.

Image Source: Times Now

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