In short
ESG stands for environmental, social and governance — the three areas investors, lenders, customers and regulators use to judge how a company is run beyond its finances. What each covers, with Indian examples.
ESG stands for environmental, social and governance. It is a way of looking at a company beyond its profit and loss: how it affects the environment, how it treats people, and how it is run. Investors, lenders, customers and regulators use ESG information to judge risks and responsibilities that financial statements do not show.
The three parts of ESG
| What it covers | Examples from Indian companies | |
|---|---|---|
| Environmental | The company's effect on the natural world | Energy use and its sources, greenhouse gas emissions (Scope 1, 2 and 3), water drawn and discharged, waste and recycling, plastic packaging |
| Social | How the company treats people, inside and outside | Health and safety, wages and benefits, gender diversity, human rights in the supply chain, community programmes, customer complaints |
| Governance | How the company is directed and controlled | Board independence, anti-corruption policies, ethics, transparency, policy advocacy, whistleblower mechanisms |
Why ESG matters to an Indian company
- Regulation. SEBI requires India's top 1,000 listed companies to publish a BRSR, and the largest must have its core indicators independently assessed or assured.1
- Customers. Large listed companies collect ESG data from their value chain, and EU customers ask Indian suppliers for emissions data under the CSRD and CBAM.
- Capital. Lenders and investors use ESG information — and SEBI-regulated ESG ratings — in their decisions.
- Operations. Measuring energy, water and waste usually shows where costs can be cut.
ESG, CSR and sustainability: what is the difference?
CSR (corporate social responsibility) in India usually means the spending required by section 135 of the Companies Act — 2% of average net profits for companies above the thresholds, on activities such as education or health. It is about spending.
ESG is about how the business itself performs — its emissions, its safety record, its governance — and about measuring and reporting it.
Sustainability is the broader goal; ESG is how progress towards it is measured and reported.
Where ESG reporting standards come from
In India, the BRSR follows the nine principles of the National Guidelines on Responsible Business Conduct.2 Internationally, companies use GRI, the ISSB's IFRS S1 and S2, the EU's ESRS and the CDP questionnaire. Our guide GRI, ISSB and ESRS compared shows how they relate, and ESG reporting in India lists every requirement an Indian company may face.
How to start with ESG
- Find out what applies to you — the BRSR, your sector's regulations, your customers' requests.
- Measure the basics: energy, fuel, water, waste and headcount, by site and month.
- Keep the evidence — bills, meter readings, registers — with each figure.
- Calculate emissions from that activity data with recognised emission factors.
- Report, and improve year on year.
The ESG glossary explains the terms, the emissions calculator turns fuel and electricity into emissions, and the BRSR readiness checklist shows how ready you are.
Frequently asked questions
What is the full form of ESG?
Environmental, social and governance.
Is ESG mandatory in India?
ESG reporting through the BRSR is mandatory for the top 1,000 listed companies by market capitalisation. Other companies report voluntarily or at the request of customers, lenders and investors.
What is an ESG score or rating?
An assessment of a company's ESG performance by a rating provider. In India, ESG rating providers must be registered with SEBI. See ESG ratings in India.
How ESGTrack helps
ESGTrack collects ESG data from sites and suppliers with its evidence, calculates emissions with recognised factors, and produces the BRSR and other reports from one approved set of figures. See it in a demo.
References
- Measures to facilitate ease of doing business with respect to framework for assurance or assessment, ESG disclosures for value chain, and introduction of voluntary disclosure on green credits — Securities and Exchange Board of India (circular). 28 March 2025
- National Guidelines on Responsible Business Conduct — Ministry of Corporate Affairs, Government of India. 2019
Next review due 6 May 2027. Regulations change: check the primary sources above before relying on a date or threshold.