Beyond Disclosure: Assessing the Effectiveness of India's New CSR Reporting Norms

Introduction

Read any of the sustainability reports of the Indian conglomerates. You will see pictures of smiling employees in branded T-shirts planting saplings, tribal women learning coding, or solar panels shining bright in golden light. You can find the stamp of full CSR compliance on the same company's Board's Report. When you go to their investor relations page, you will see three ESG ratings, a sustainability award and a pledge to become a net zero.

Today companies are not only competing on profit margins. Portfolios are screened for ESG scores by investors, regulators require sustainability disclosures, and employees select employers for CSR commitments.

The centre question has therefore shifted. It is no longer a question of whether companies disclose CSR activities. It is if those disclosures are true. As India moves from CSR spending compliance to impact-driven disclosure, it is important to ask: is the company more accountable, or is it more savvy in telling a sustainability story?

The World's First CSR Law Had One Blind Spot: It Never Asked "Did It Work?"

Under Section 135 of Companies Act 2013, India was the first country in the world to legislate CSR spending, obliging qualified companies to allocate 2% of their average net profit to Schedule VII activities, under the control of the Board of Directors and with mandatory reporting of these CSR activities on an annual basis. However, after a decade of compliance, 3 major structural issues were identified:

Amount spent ≠ impact created. That money did not actually get to its intended recipients.

Sustainability sections started to become more like a template that was repeated in nearly the same words in hundreds of reports, year after year.

The metrics were not standardised, thus an investor, regulator or civil society organisation could not compare the CSR effectiveness of one company with another in the same industry.

The main problem - the law required the companies to spend, but not to show the outcome.

The New Transparency Architecture: Three Layered Reforms

Indian regulators gradually built one of Asia’s more comprehensive ESG disclosure frameworks that is designed to measure not just spending, but impact, comparability, and accountability. It consists of three layered reforms.

Mandatory CSR Impact Assessment

New Companies (CSR Policy) Amendment Rules, 2021, have been introduced which mandates independent impact assessment for companies with a CSR obligation of ₹10 crore or more on average for the three financial years preceding the previous financial year. The assessment should be carried out by an independent agency and should be included in the Board's report. It is the responsibility of the CSR Committee to commission and review the assessment prior to the Board's sign-off. The law was the first to pose the question: “what did we spend our money for?” rather than “how much did we spend?”

The BRSR: Standardised ESG Reporting for Listed Companies

In 2021, SEBI transformed the ESG disclosure landscape for India's capital markets by passing a Circular. The Business Responsibility and Sustainability Reporting (BRSR) guidelines were introduced for the top 1,000 companies by market cap from FY 2022-23.

The BRSR superseded the previous Business Responsibility Report. Now, companies had to report quantitative and metric-based ESG data. The framework is organised around the nine principles of the National Guidelines on Responsible Business Conduct (NGRBC) and is clearly stakeholder-focused, not just compliance-focused.

BRSR Core and Mandatory Assurance

In 2023, SEBI published a Circular which contains the BRSR Core framework, along with a requirement that is unique to India - the requirement for reasonable assurance by an independent third-party provider.

The BRSR Core is a smaller version of the full BRSR, which contains more than 40 Key Performance Indicators grouped into nine categories of ESG attributes including greenhouse gas emissions, fairness with customers, openness of business, and others. These KPIs must be independently verified. The rollout of the assurances is on a staged timeline, with all top 1,000 listed entities covered by FY 2026-27.

The Greenwashing Problem

This is a statistic that should give every compliance officer a headache. A Nifty 50 analysis published in Environment, Development and Sustainability (2024) revealed that 54% of the analyzed 48 companies exhibited evidence of greenwashing activity, with energy companies having the highest greenwashing scores.

These figures point to three recurring patterns in the way India Inc. approaches ESG disclosure.

A. Overstated Claims

Tree plantation drives, installation of renewable energy, and women entrepreneurship programmes are eagerly advertised by companies but what they leave out can disclose much more. This emphasis on the positive and the suppression of the negative is no accident but ‘cherry-picking’. It's a compliance approach.

Take the example of Ekam Eco Solutions Pvt. Ltd., which marketed its Zerodar CARE Natural Hand Wash Liquid across Indian media platforms. The company claimed the product was completely ‘eco-friendly’ and ‘natural’, but the Advertising Standards Council of India (ASCI) pulled up the brand because it failed to provide any third-party lifecycle data or scientific evidence to substantiate the blanket environmental claim. Quest Retail Private Limited (the distributor for The Body Shop in India) also faced a reprimand from ASCI for claiming its Strawberry Shower Scrub container was made from ‘30% recycled plastic’, when the company could not produce any accredited supply chain documentation or material certifications to prove the sourcing.

These cases show a pattern in India's corporate sustainability scene. It is more difficult to identify the same trend at the macro level of ESG and CSR disclosures, since the reports are longer, more complex and self-generated.

B. The Vanity Number Problem

A company announces that it planted 10,000 trees last year. What is the survival rate of those trees? Were species ecologically suitable for the area? Is the plantation self-certified? “10,000 trees” is a number, not an outcome.

The OECD has reported that around 40% of environmental claims in the world are without supporting evidence.

India's regulatory action, including SEBI's BRSR, the CCPA's 2024 Greenwashing Guidelines, which require scientific support for environmental claims, and the Ecomark Rules notified by the MoEFCC on 26 September 2024, are a belated recognition of the fact that numbers, in isolation, are the most effective type of misrepresentation.

Perhaps the most dramatic example is Scope 3 emissions. These are GHG emissions produced along the value chain, from raw material extraction, through logistics, to product use and disposal. They are generally 70-90% of a company's overall climate footprint. They are also regularly not included in Indian sustainability reports as they are the most difficult to manage and the most disclosing. The BRSR Core's mandate to incorporate value chain partners in the ESG disclosure is a direct structural intervention to this avoidance.

C. The Self-Certification Problem

India's corporate sustainability landscape has fostered a vibrant market for ESG certifications, sustainability rankings, and industry recognition initiatives. Many of these frameworks are based on data submitted by companies. The metric is set by the company, the data is supplied by the company, and the award is given to the company.

This forms what can be described as the self-certification loop - a closed system in which the only way to verify its accuracy is by relying on the integrity of the company itself. The third-party assurance requirement in the BRSR Core was introduced exactly to end this vicious cycle. However, the loop is not fully closed until full assurance coverage is available for all 1,000 listed companies in FY 2026–27. In December 2024, SEBI approved some changes to the BRSR Core framework, as it felt the framework was still open to narrative manipulation, and at the same time, the Expert Committee recommended replacing the word “assurance” with “assessment” in some parts of the framework which sparked a low-key debate among the ESG practitioner community in India. This amendment was later formalized by SEBI Guidelines in March 2025.

Are India’s Norms Strong Enough to Detect Greenwashing?

The new disclosure architecture of India is a real improvement. The issue is whether the architecture is equipped with the teeth to catch more advanced non-compliance. Within this better structure there are three structural gaps:

The Verification Gap: For the most part, BRSR reports are self-declared. BRSR Core's mandatory assurance requirement is rolling out gradually and is only applicable to a small number of the top 1,000 companies at this time. The rest - and the thousands of companies with CSR obligations that are not in the top 1,000 - continue to have no disclosures that are verified.

Data Quality and Infrastructure: A few common readiness gaps among listed Indian companies are the lack of definition of KPIs, manual data collection, lack of source documentation and weak internal control over ESG data. The danger here is not only that some of the numbers might be incorrect, but that entire measurement systems could have to be re-built once the assurance providers conduct their audits.

The Absent Taxonomy: India does not yet have a national taxonomy for sustainable economic activities, which is a formal classification system that identifies what is “green,” “socially beneficial” or “sustainable.” If there is no taxonomy, companies are able to set their own limits as to what constitutes a CSR or ESG activity, making it difficult to make any meaningful comparisons across companies. The EU Taxonomy Regulation, which helps shape the CSRD, provides an example of such a framework.

What Companies and Counsel Need to Know?

ESG disclosure is no longer a PR exercise or a compliance box-ticking exercise. It has legal implications.

For Companies: The ESG disclosures under the BRSR framework are regulated under the SEBI Act, 1992 and SEBI (LODR) Regulations, 2015. Listed companies have a legal responsibility to provide accurate, complete and non-misleading disclosure of all material information. In this context, greenwashing can result in liability as:

Material misstatements in continuous or periodic disclosures;

Market manipulation by providing misleading sustainability statements that impact investor decisions;

The purpose-washing under SEBI's 2025 circular on ESG Debt Securities, which explicitly provides safeguards against misleading statements by the issuers of sustainability bonds or social bonds on the use of proceeds.

For Directors:

Under the provisions of Section 166 of the Companies Act, 2013, directors are expected to act in the best interests of the company and its stakeholders with due care and diligence. A director signing a Board's Report that includes a CSR disclosure statement that he or she knows to be inaccurate or incomplete will be held personally liable, not just institutionally. The CSR Committee (with at least one independent director) was instituted as a compulsory committee to ensure individual responsibility for the quality of CSR information. This will be further strengthened by the proposed Companies (Amendment) Bill, 2025, which mandates that the CSR Committee must have at least one CSR experienced director.

In the context of the 2024 Guidelines, consumer protection plays a central role in ESG Claims. According to the Consumer Protection Act, 2019, a misleading advertisement is an advertisement that creates a false impression or conceals material facts. The Central Consumer Protection Authority (CCPA)'s Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims, 2024, stipulate that any environmental claim must be substantiated with scientific evidence or third-party certification. There is no longer a safe way to use terms like "carbon neutral," "net zero," "eco-safe" or "100% natural" unless they are substantiated.

The CCPA can impose fines of up to ₹10 lakh on companies for a first time violation and ₹50 lakhs for subsequent violations. What was once merely a reputational risk is now becoming a consumer protection, and governance risk.

Conclusion

There is an India story of ESG that stops here - with a statement of confidence that the regulation has progressed. The BRSR Core framework and the impact assessment requirement is actually sound and sophisticated. The CCPA's Greenwashing Guidelines demonstrate institutional commitment. The distance covered is real and significant as compared to 2013 when filing of a form was considered compliance.

But another version of the story argues for a harder question: when a business has fulfilled all the requirements of Section 135, submitted a compliant BRSR, had a third party assurance certificate and won an award for sustainability from an industry body, but its effluent still flows into a river, workers in its supply chain still work on a below living wage, and its Scope 3 emissions are still not disclosed, has the regulatory framework worked? Well, the answer is ‘not yet’. The risk of sophisticated greenwashing will remain until corporate reporting and real-world outcomes become more closely aligned.

Author: Jyotsana Singh, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

References

1. Companies Act 2013, s 135 (India), available at: https://www.indiacode.nic.in (accessed 13 June 2026).

2. Ministry of Corporate Affairs, Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, Notification G.S.R. 40(E), 22 January 2021.

3. Ministry of Corporate Affairs, General Circular No. 01/2021: Clarification on CSR Impact Assessment Requirements, Government of India, 2021.

4. Securities and Exchange Board of India (SEBI), Circular No. SEBI/HO/CFD/CMD-2/P/CIR/2021/562, Business Responsibility and Sustainability Reporting by Listed Entities, 10 May 2021, available at: https://www.sebi.gov.in (accessed 13 June 2026).

5. Securities and Exchange Board of India, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

6. Securities and Exchange Board of India, Framework for ESG Debt Securities (excluding Green Debt Securities), Circular, 2025.

7. Ministry of Corporate Affairs, Companies (Accounts) Second Amendment Rules, 2024, Notification dated 31 December 2024.

8. Ministry of Corporate Affairs, Companies (Accounts) Amendment Rules, 2025, G.S.R. 317(E), 19 May 2025.

9. Central Consumer Protection Authority (CCPA), Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims, 2024, Ministry of Consumer Affairs, Government of India.

10. Advertising Standards Council of India (ASCI), Guidelines for Advertisements Making Environmental/Green Claims, 15 February 2024.

11. Ministry of Environment, Forest and Climate Change, Ecomark Rules, 2024, Notification dated 26 September 2024.

12. Reserve Bank of India, Framework for Acceptance of Green Deposits, RBI Circular, April 2023.

13. Ministry of Corporate Affairs, National Guidelines on Responsible Business Conduct (NGRBC), 13 March 2019.

14. European Parliament and Council of the European Union, Corporate Sustainability Reporting Directive (Directive (EU) 2022/2464), entered into force 5 January 2023.

15. European Parliament and Council of the European Union, Directive (EU) 2024/825 on Empowering Consumers for the Green Transition Through Better Protection Against Unfair Practices and Better Information, 26 March 2024.

16. Securities and Exchange Board of India, Recommendations of the Expert Committee for Facilitating Ease of Doing Business with respect to Business Responsibility and Sustainability Reporting (BRSR) (May 2024), available at: https://www.sebi.gov.in (accessed 13 June 2026).

17. Companies (Amendment) Bill, 2025 (Pending Legislative Proposal).

18. M Gidage, V K Nema and P Nema, ‘Greenwashing in the Indian Corporate Landscape: An Empirical Assessment of ESG Disclosures of NIFTY 50 Companies’ (2024) Environment, Development and Sustainability. DOI: 10.1007/s10668-024-05191-3.

19. Advertising Standards Council of India, Ekam Eco Solutions Pvt Ltd – Zerodar CARE Natural Hand Wash Liquid, Complaint Outcome No 2024-3-28-6-C.29006 (ASCI Complaint Outcomes Database), available at: https://www.ascionline.in/complaint-outcomes-details/?case_id=2024-3-28-6-C.29006 (accessed 13 June 2026).

20. Advertising Standards Council of India, Quest Retail Private Limited (The Body Shop India) - Strawberry Shower Scrub 200 ml, Complaint Outcome No 2023-5-16-6-C.11150, available at: https://www.ascionline.in/ complaint-outcomes-details/?case_id=2023-5-16-6-C.11150 (accessed 13 June 2026)

21. Business Standard, ‘Unspent CSR Funds Hit Five-Year High of ₹1,475 Crore in FY23’ (19 August 2024), citing Prime Database/PrimeInfobase data.