Essential ESG regulations for Indian businesses
Summary Table
| Regulation Name | Businesses Affected | Regulatory Body | Implementation Date | Regulation Purpose | Voluntary/Mandatory | Potential Benefits | Penalties for Non-Compliance |
|---|---|---|---|---|---|---|---|
| Companies Act, 2013 | Companies meeting financial thresholds | Ministry of Corporate Affairs | April 1, 2014 | Enhance corporate governance and accountability | Mandatory | Improved corporate governance, social impact | Fines ranging from INR 50,000 to INR 25 lakh, and imprisonment for officers in default |
| SEBI’s ESG Reporting Mandate | Top 1000 listed companies | SEBI | FY 2022-23 | Enhance transparency and accountability in ESG practices | Mandatory | Enhanced transparency, investor confidence | Penalties include fines and potential delisting from stock exchanges |
| Global Reporting Initiative (GRI) | All companies | GRI | 2016 | Provide a framework for sustainability reporting | Voluntary | Improved sustainability reporting, global recognition | None |
| SASB | All companies | SASB | 2018 | Disclose financially material sustainability information | Voluntary | Better financial and sustainability integration | None |
| TCFD | All companies | TCFD | 2017 | Improve reporting of climate-related financial information | Voluntary | Enhanced climate risk management | None |
| Factories Act, 1948 | Manufacturing units | Ministry of Labour and Employment | April 1, 1949 | Ensure health, safety, and welfare of workers | Mandatory | Improved worker safety and welfare | Fines up to INR 2 lakh, and imprisonment for up to 2 years for serious violations |
| India Forest Act | Businesses using forest resources | Ministry of Environment, Forest and Climate Change | 1927 | Conserve forests and regulate forest produce | Mandatory | Sustainable use of forest resources | Fines and imprisonment for illegal use of forest resources |
| India Air Act, 1981 | Industries emitting pollutants | Central Pollution Control Board | March 29, 1981 | Control and prevent air pollution | Mandatory | Improved air quality | Fines up to INR 1 lakh, and imprisonment for up to 6 years for severe violations |
| Water Prevention Act, 1974 | Industries discharging effluents | Central Pollution Control Board | March 23, 1974 | Prevent and control water pollution | Mandatory | Improved water quality | Fines up to INR 1 lakh, and imprisonment for up to 6 years for severe violations |
| Environment Protection Act, 1986 | All industries | Ministry of Environment, Forest and Climate Change | November 19, 1986 | Provide a framework for environmental protection | Mandatory | Comprehensive environmental management | Fines up to INR 1 lakh per day, and imprisonment for up to 5 years for severe violations |
| Listing Regulations | Listed companies | SEBI | 2015 | Ensure transparency and accountability in listed companies | Mandatory | Enhanced corporate governance | Penalties include fines and potential delisting from stock exchanges |
| Prevention of Corruption Act, 1988 | All companies | Central Vigilance Commission | September 9, 1988 | Combat corruption in public and private sectors | Mandatory | Reduced corruption, improved business ethics | Fines and imprisonment for individuals involved in corruption |
| Minimum Wage Laws | All employers | Ministry of Labour and Employment | March 15, 1948 | Ensure fair wages for workers | Mandatory | Improved worker welfare | Fines and imprisonment for non-compliance with wage standards |
If you are looking for an experienced ESG expert who can help your business get the best out of these regulations, learn more about our services here
Details about the regulations
Here’s a summary of the key ESG regulations applicable in India:
1. Companies Act, 2013
Background: Introduced to enhance corporate governance and accountability.
Impact on Businesses: Mandates Corporate Social Responsibility (CSR) for companies meeting certain financial thresholds, requiring them to spend at least 2% of their average net profits on CSR activities.
Important Dates: CSR provisions became effective from April 1, 2014.
Required ESG Expertise: CSR consultants and corporate governance experts.
2. SEBI’s ESG Reporting Mandate
Background: Introduced to enhance transparency and accountability in ESG practices.
Impact on Businesses: Requires the top 1000 listed companies to submit Business Responsibility and Sustainability Reports (BRSR).
Important Dates: Effective from FY 2022-23.
Required ESG Expertise: Sustainability reporting specialists.
3. Global Reporting Initiative (GRI)
Background: International standards for sustainability reporting.
Impact on Businesses: Provides a framework for companies to report on their ESG performance.
Important Dates: GRI Standards were launched in 2016.
Required ESG Expertise: GRI-certified professionals.
4. Sustainability Accounting Standards Board (SASB)
Background: Provides industry-specific standards for sustainability reporting.
Impact on Businesses: Helps companies disclose financially material sustainability information.
Important Dates: SASB Standards were codified in 2018.
Required ESG Expertise: SASB-certified professionals.
5. Task Force on Climate-related Financial Disclosures (TCFD)
Background: Developed to improve and increase reporting of climate-related financial information.
Impact on Businesses: Encourages companies to disclose climate-related risks and opportunities.
Important Dates: Recommendations published in 2017.
Required ESG Expertise: Climate risk analysts.
6. Factories Act, 1948
Background: Ensures the health, safety, and welfare of workers.
Impact on Businesses: Requires compliance with safety standards and welfare measures.
Important Dates: Enacted on April 1, 1949.
Required ESG Expertise: Occupational health and safety experts.
7. India Forest Act
Background: Aims to conserve forests and regulate forest produce.
Impact on Businesses: Imposes restrictions on the use of forest resources.
Important Dates: Enacted in 1927.
Required ESG Expertise: Environmental conservation specialists.
8. India Air Act, 1981
Background: Aims to control and prevent air pollution.
Impact on Businesses: Requires industries to obtain consent to operate and adhere to emission standards.
Important Dates: Enacted on March 29, 1981.
Required ESG Expertise: Air quality management experts.
9. Water Prevention Act, 1974
Background: Aims to prevent and control water pollution.
Impact on Businesses: Requires industries to obtain consent to discharge effluents.
Important Dates: Enacted on March 23, 1974.
Required ESG Expertise: Water quality management experts.
10. Environment Protection Act, 1986
Background: Provides a framework for environmental protection.
Impact on Businesses: Requires compliance with environmental standards and permits.
Important Dates: Enacted on November 19, 1986.
Required ESG Expertise: Environmental compliance specialists.
11. Listing Regulations
Background: Ensures transparency and accountability in listed companies.
Impact on Businesses: Mandates disclosure of ESG practices in annual reports.
Important Dates: SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015.
Required ESG Expertise: Corporate governance experts.
12. Prevention of Corruption Act, 1988
Background: Aims to combat corruption in public and private sectors.
Impact on Businesses: Requires companies to implement anti-corruption measures.
Important Dates: Enacted on September 9, 1988.
Required ESG Expertise: Anti-corruption compliance specialists.
13. Minimum Wage Laws
Background: Ensures fair wages for workers.
Impact on Businesses: Requires companies to pay minimum wages as prescribed by law.
Important Dates: Enacted on March 15, 1948.
Required ESG Expertise: Labor law specialists.
Disclaimer- Please remember that ESG regulations are evolving over time, and to stay updated on which specific regulations influence your business the most, you need to consult with an ESG expert. You can find India’s top ESG specialists here.
