Which companies must report on sustainability in India?

Sustainability reporting in a prescribed format applies to listed entities meeting the criteria specified by the securities regulator, based on market capitalisation, with the requirement having been extended in phases. Specified indicators are subject to assurance, and disclosure in respect of the value chain applies to entities meeting further criteria. Applicability should be confirmed against the requirements in force for the relevant reporting year.

What are the consequences of not spending the required CSR amount?

The Companies Act, 2013 provides for treatment of amounts remaining unspent, requiring transfer to a specified fund or, where the amount relates to an ongoing project, to a designated account within the period prescribed, with further consequences if it remains unspent thereafter. The framework provides for penalties in respect of contravention, and responsibility for compliance forms part of the duties of the board.

What is extended producer responsibility?

Extended producer responsibility places obligations on producers, importers and brand owners in respect of the waste generated by their products, including registration, collection and recycling targets, and reporting. It applies to notified categories, which include plastic packaging, electronic waste and batteries. Compliance is generally evidenced through certificate mechanisms administered under the applicable rules.

Is carbon trading regulated in India?

Energy conservation legislation provides for a carbon credit trading scheme, with the framework, obligated entities and trading arrangements established through subordinate instruments. The scheme has been developed in phases. Separately, participation in voluntary carbon markets is undertaken on a contractual basis, with its own documentation and verification considerations.

What is greenwashing exposure?

Greenwashing refers to environmental or sustainability claims that are inaccurate, unsubstantiated or misleading. Exposure in India arises principally under consumer protection law in respect of misleading advertisements and unfair trade practices, under securities law where claims appear in disclosure by listed entities, and contractually where sustainability representations are given. Guidance has been issued on substantiation of environmental claims in consumer communication.

Do foreign sustainability requirements apply to Indian companies?

Foreign sustainability due diligence and reporting regimes generally do not apply directly as law in India, but they reach Indian businesses through the contracts of customers subject to them, and through market access measures affecting specified exports. The obligation is therefore commonly contractual or commercial rather than statutory, which affects both the standard applicable and the consequence of failure.

What does ESG due diligence in a transaction cover?

ESG due diligence typically examines environmental clearances and compliance history, waste and producer responsibility obligations, labour and workplace compliance, supply chain arrangements, governance structures and board processes, sustainability disclosure made publicly, and any pending proceedings or allegations. Findings are addressed through price, conditions, warranties, indemnities or post-completion covenants.

Who within a company is responsible for ESG compliance?

Responsibility varies with the obligation. Corporate social responsibility requirements contemplate a committee of the board where applicable; sustainability reporting is approved as part of the annual disclosure of a listed entity; environmental compliance obligations attach to occupiers and to persons in charge of operations. Allocation of responsibility internally is itself a governance matter and is ordinarily documented.

ESG & Sustainability

ESG and sustainability practice concerns the legal obligations arising from environmental, social and governance requirements, including mandatory disclosure, environmental compliance, responsible sourcing and the governance standards applicable to boards. Sagar & Sagar Law Offices advises on sustainability reporting obligations applicable to listed entities, corporate social responsibility requirements under the Companies Act, 2013, extended producer responsibility and waste management obligations, carbon and green finance frameworks, and exposure arising from sustainability claims. Work covers disclosure, compliance, transactional diligence and defence of claims.

ESG in India has moved from voluntary commitment to enforceable obligation across several fronts simultaneously. Listed entities above specified thresholds are required to report on sustainability matters in a prescribed format, with assurance requirements applying to specified indicators. Corporate social responsibility spending is a statutory obligation with consequences for unspent amounts. Producers of specified goods carry extended producer responsibility obligations for the waste their products generate. Energy conservation legislation now contemplates carbon credit trading. Claims made about environmental attributes attract consumer protection scrutiny.

Alongside domestic requirements, Indian businesses supplying international markets increasingly face sustainability due diligence and reporting requirements imposed by foreign purchasers and regimes, which operate as contractual and commercial obligations even where they do not apply as law in India. The practice at Sagar & Sagar Law Offices addresses both dimensions: the domestic statutory framework, and the obligations that reach Indian businesses through supply chains and transactions.

Scope of work

Sustainability reporting and disclosure

Mandatory and voluntary reporting on ESG matters.

Advice on applicability of sustainability reporting requirements to a listed entity
Advice on the format, content and scope of prescribed sustainability disclosure
Advice on indicators subject to assurance and on the assurance process
Advice on value chain disclosure requirements and on their scope
Review of draft disclosures for accuracy and legal exposure
Advice on consistency between sustainability disclosure and other public statements
Advice on governance of the reporting process and on board responsibility for it
Advice on voluntary reporting frameworks and on their legal consequences
Advice on liability arising from inaccurate or misleading disclosure

Corporate social responsibility

Statutory obligations concerning expenditure on specified activities.

Advice on applicability of corporate social responsibility obligations
Advice on computation of the amount required to be spent
Advice on permissible activities and on activities excluded from the framework
Advice on implementation modalities, including through implementing agencies
Advice on ongoing projects and on treatment of unspent amounts
Advice on transfer of unspent amounts to specified funds and accounts
Drafting of policy, committee terms of reference and implementation agreements
Advice on reporting, disclosure and impact assessment requirements
Advice on consequences of non-compliance

Environmental compliance and producer responsibility

Obligations concerning environmental impact and product lifecycle.

Advice on environmental clearance and consent requirements applicable to operations
Advice on conditions attaching to clearances and on compliance reporting
Advice on extended producer responsibility obligations for specified categories of waste
Advice on registration, targets and certificate mechanisms under waste management frameworks
Advice on obligations concerning plastic packaging, electronic waste, batteries and other notified categories
Advice on recycling, collection and take-back arrangements and their documentation
Advice on hazardous waste handling and disposal obligations
Representation in proceedings before pollution control authorities and the environmental tribunal
Defence of proceedings alleging environmental non-compliance
Advice on environmental liability in acquisitions and site transfers

Carbon, energy and climate

Obligations arising from energy and emissions regulation.

Advice on the framework governing carbon credit trading and on participation in it
Advice on energy efficiency obligations applicable to designated consumers
Advice on renewable purchase obligations and on compliance mechanisms
Advice on renewable energy procurement arrangements, including through open access
Advice on voluntary carbon market transactions and on associated documentation
Advice on emissions-related contractual commitments and their enforceability
Advice on climate-related disclosure and on associated exposure
Advice on cross-border carbon-related measures affecting exporters

Green and sustainable finance

Financing arrangements with sustainability features.

Advice on issuance of green, social and sustainability-linked debt securities
Advice on the framework applicable to such instruments and on associated disclosure
Advice on use of proceeds, reporting and verification obligations
Advice on sustainability-linked loans and on key performance indicator structures
Advice on green deposit frameworks applicable to regulated lenders
Advice on exposure arising from failure to meet sustainability-linked targets
Advice on ESG considerations in fund documentation and investor commitments

Governance and board matters

Governance dimension of ESG obligations.

Advice on board composition, independence and committee requirements
Advice on board oversight of sustainability matters and on delegation
Advice on vigil mechanisms and whistleblower arrangements
Advice on related party transaction governance
Advice on directors' duties in relation to sustainability commitments
Advice on remuneration linked to sustainability performance
Advice on stakeholder engagement obligations and grievance mechanisms
Advice on business responsibility policies and their implementation

Social, supply chain and human rights

The social dimension, including obligations reaching businesses through supply chains.

Advice on responsible sourcing requirements imposed by customers and counterparties
Supply chain due diligence, including in relation to labour standards
Advice on supplier codes of conduct and on their contractual incorporation
Advice on audit rights, remediation and termination for supply chain non-compliance
Advice on obligations concerning child labour, forced labour and working conditions in supply chains
Advice on the interaction between domestic labour compliance and international due diligence expectations
Advice on community engagement, land and displacement issues in projects
Advice on accessibility, diversity and non-discrimination commitments

Greenwashing and sustainability claims

Exposure arising from what a business says about itself.

Review of sustainability and environmental claims in advertising and packaging
Advice on substantiation required for environmental claims
Advice on guidance applicable to environmental claims in consumer communication
Advice on consistency between marketing claims and regulatory disclosure
Advice on exposure under consumer protection and securities law for misleading claims
Representation in proceedings concerning environmental claims
Advice on responding to third-party allegations of greenwashing

ESG in transactions

Sustainability issues arising in corporate activity.

ESG due diligence in acquisitions and investments
Advice on environmental and social liabilities identified in diligence
Drafting of ESG representations, warranties, covenants and indemnities
Advice on ESG conditions imposed by investors and lenders
Advice on post-completion integration of ESG compliance
Advice on ESG considerations in financing documentation

Forums and authorities

Securities and Exchange Board of India, in respect of listed entity disclosure
Ministry of Corporate Affairs, in respect of corporate social responsibility and governance
Central and State Pollution Control Boards
Ministry of Environment, Forest and Climate Change
National Green Tribunal
Bureau of Energy Efficiency and authorities administering carbon and energy efficiency frameworks
Central Consumer Protection Authority, in respect of environmental claims
Reserve Bank of India, in respect of green finance frameworks applicable to regulated lenders
High Courts and the Supreme Court of India

Who we act for

Listed companies subject to sustainability reporting obligations
Companies subject to corporate social responsibility requirements
Manufacturers and producers with extended producer responsibility obligations
Exporters facing sustainability requirements in foreign markets
Energy and infrastructure businesses
Banks, non-banking financial companies and investors applying ESG criteria
Investment funds with sustainability mandates
Boards, audit committees and sustainability committees
Parties to transactions with ESG diligence requirements

How we approach this work

Disclosure treated as a statement of legal consequence.

Sustainability reporting is a public statement capable of being relied upon and challenged. Draft disclosure is reviewed for accuracy and exposure, not only for completeness.

Domestic obligations distinguished from contractual ones.

Requirements reaching Indian businesses through customer contracts and foreign regimes operate differently from Indian statutory obligations. Advice identifies the source of each requirement and the consequence of breach.

Claims matched to substantiation.

Environmental claims are assessed against the evidence available to support them before publication, since substantiation is what is examined when a claim is challenged.

Governance addressed alongside substance.

Where a sustainability obligation exists, so does a question of who within the organisation is responsible for it. Committee structures, delegation and reporting lines are addressed as part of the compliance position.

Frequently asked questions

Which companies must report on sustainability in India?: Sustainability reporting in a prescribed format applies to listed entities meeting the criteria specified by the securities regulator, based on market capitalisation, with the requirement having been extended in phases. Specified indicators are subject to assurance, and disclosure in respect of the value chain applies to entities meeting further criteria. Applicability should be confirmed against the requirements in force for the relevant reporting year.
What are the consequences of not spending the required CSR amount?: The Companies Act, 2013 provides for treatment of amounts remaining unspent, requiring transfer to a specified fund or, where the amount relates to an ongoing project, to a designated account within the period prescribed, with further consequences if it remains unspent thereafter. The framework provides for penalties in respect of contravention, and responsibility for compliance forms part of the duties of the board.
What is extended producer responsibility?: Extended producer responsibility places obligations on producers, importers and brand owners in respect of the waste generated by their products, including registration, collection and recycling targets, and reporting. It applies to notified categories, which include plastic packaging, electronic waste and batteries. Compliance is generally evidenced through certificate mechanisms administered under the applicable rules.
Is carbon trading regulated in India?: Energy conservation legislation provides for a carbon credit trading scheme, with the framework, obligated entities and trading arrangements established through subordinate instruments. The scheme has been developed in phases. Separately, participation in voluntary carbon markets is undertaken on a contractual basis, with its own documentation and verification considerations.
What is greenwashing exposure?: Greenwashing refers to environmental or sustainability claims that are inaccurate, unsubstantiated or misleading. Exposure in India arises principally under consumer protection law in respect of misleading advertisements and unfair trade practices, under securities law where claims appear in disclosure by listed entities, and contractually where sustainability representations are given. Guidance has been issued on substantiation of environmental claims in consumer communication.
Do foreign sustainability requirements apply to Indian companies?: Foreign sustainability due diligence and reporting regimes generally do not apply directly as law in India, but they reach Indian businesses through the contracts of customers subject to them, and through market access measures affecting specified exports. The obligation is therefore commonly contractual or commercial rather than statutory, which affects both the standard applicable and the consequence of failure.
What does ESG due diligence in a transaction cover?: ESG due diligence typically examines environmental clearances and compliance history, waste and producer responsibility obligations, labour and workplace compliance, supply chain arrangements, governance structures and board processes, sustainability disclosure made publicly, and any pending proceedings or allegations. Findings are addressed through price, conditions, warranties, indemnities or post-completion covenants.
Who within a company is responsible for ESG compliance?: Responsibility varies with the obligation. Corporate social responsibility requirements contemplate a committee of the board where applicable; sustainability reporting is approved as part of the annual disclosure of a listed entity; environmental compliance obligations attach to occupiers and to persons in charge of operations. Allocation of responsibility internally is itself a governance matter and is ordinarily documented.

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Overview