(a) Is there any statutory duty to implement net zero business strategies?

India has developed a comprehensive regulatory framework to govern businesses with high greenhouse gas (“GHG”) emissions, particularly through carbon trading mechanisms. Below is an overview of key statutory duties, regulatory frameworks, and enforcement mechanisms related to net zero strategies, carbon offsets, and corporate accountability for emissions.

Yes, India has introduced regulatory measures to facilitate the transition towards net zero emissions:

1. The Energy Conservation Act, 2001, as amended by the Energy Conservation (Amendment) Act, 2022, enforces policies aligned with India’s global emission reduction commitments. It mandates the progressive adoption of non-fossil energy sources, promotes carbon credit trading, and imposes penalties on excessive energy consumption by designated consumers.
2. The Securities and Exchange Board of India (“SEBI”) has made Business Responsibility and Sustainability Reporting (“BRSR”) mandatory for the top 1,000 listed companies by market capitalization. These companies must disclose direct, indirect, and value-chain emissions and provide an Environmental and Social Impact Assessment (“EIA/SIA”) of their operations.
3. On July 12, 2023, SEBI introduced BRSR core, a stricter Environmental, Social, and Governance (“ESG”) disclosure framework ensuring third-party assurance on nine key ESG attributes, including job creation in small towns, wage parity for women, and business transparency.
4. The Companies Act, 2013 (“Companies Act”) provides inclusion of energy conservation in the board’s report, action of directors relating to protection of the environment including the Companies (Corporate Social Responsibility Policy) Rules, 2014 (“CSR Rules”).

(b) Is the use of carbon offsets to meet net zero or carbon neutrality commitments regulated?

Yes, India has implemented a structured approach to regulate carbon offsetting and emissions trading:

1. The Carbon Credit Trading Scheme, 2023 (notified on June 28, 2023) (“CCTS”) governs carbon credit markets, ensuring private sector participation in emission reduction initiatives while maintaining financial incentives. The CCTS sets out the framework for establishment of an Indian carbon market and a framework for reducing, sequestering, or avoiding GHG emission across sectors of the Indian economy. Further, the Government of India released the National Action Plan on Climate Change (“NAPCC”) in 2008. One of the missions under the NAPCC is the National Mission for Enhanced Energy Efficiency (“NMEEE”). Under NMEEE, Perform, Achieve and Trade Scheme (“PAT Scheme”) was formulated, that conceptualized performance norms and standards to be achieved by the designated consumers for the purpose of issuance and trade of energy saving certificates (“ESCs”). In this respect, Central Electricity Regulatory Commission (Terms and Conditions for Dealing in Energy Savings Certificates) Regulations, 2016 were formulated in furtherance of the PAT Scheme.
2. The renewable energy certificates (“RECs”) are regulated by Central Electricity Regulatory Commission (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations, 2022 under which RECs can be traded or purchased by obligated entities to comply with the renewable purchase obligations.
3. The Energy Conservation (Amendment) Act, 2022 has brought the CCTS under the purview of the Central government. The Central government or any authorised agency may now issue carbon credit certificates to the registered entities compliant with the CCTS.

(c) Have there been any test cases brought against companies for undeliverable net zero strategies?

Currently, no landmark cases have been reported against companies for failing to deliver on net zero commitments, primarily because India’s official net zero target is set for the year 2070. However, enforcement actions have been taken against companies violating statutory emission reduction mandates, particularly in cases where:

1. Industries failed to comply with pollution control norms, leading to legal actions by the National Green Tribunal (“NGT”).
2. Companies misrepresented sustainability commitments in financial disclosures, triggering scrutiny under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”).
3. Environmental violations resulted in the cancellation of environmental clearances, as seen in cases where industries failed to adhere to EIA norms under the Environment Protection Act, 1986.

(d) Have there been any test cases brought against companies for their proportionate contribution to global levels of greenhouse gases (GHGs)?

There are no particular cases in India where companies have been held liable for their proportionate contribution to global GHG levels. However:

1. The NGT, under the National Green Tribunal Act, 2010, has imposed penalties on corporations violating environmental and pollution control laws.
2. The Central Pollution Control Board (“CPCB”), under the Air (Prevention and Control of Pollution) Act, 1981, has taken enforcement action against companies exceeding permissible emission levels.
3. India has not yet established climate liability litigation frameworks similar to cases seen in the Europe or the United States of America, where corporations face lawsuits for their historical contribution to climate change.

(e) Are there any financial regulations promoting green investments?

There are few measures introduced by the financial regulators to channel investments into environmentally sustainable projects. The Reserve Bank of India (“RBI”) introduced the green deposit framework, effective from June 1, 2023, to promote responsible banking practices. The green deposits are interest-bearing fixed deposits, where banks must allocate proceeds to eligible green projects while maintaining transparency in fund utilization. The framework aims to:

1. Encourage banks and non-banking financial institutions to mobilize green finance.
2. Ensure accountability through third-party verification and annual disclosures on fund allocation.
3. Prevent greenwashing risks by defining clear eligibility criteria for green investments.

The demonstration of biodiversity net gain (“BNG”) is not yet a statutory requirement under the Indian law for new development projects in order to obtain development consent. Unlike nations like the United Kingdom, where the Environment Act of 2021 requires BNG, India lacks a specific legal framework that requires development efforts to result in a quantifiable BNG.

That said, Indian environmental laws do incorporate biodiversity-related considerations through indirect regulatory mechanisms. The EIA Notification, 2006 (“EIA Notification”) enacted under the Environment (Protection) Act, 1986, requires an environmental clearance for certain categories of development projects. The EIA process mandates an assessment of ecological and biodiversity impacts, particularly in environmentally sensitive areas. While the law does not explicitly require a BNG, it emphasizes on:

1. avoidance and mitigation measures;
2. compensatory afforestation, especially when forest land is diverted, as mandated by the Forest (Conservation) Act, 1980; and
3. ecological restoration.

The projects located within or near protected areas, such as national parks or wildlife sanctuaries, require clearance from the Standing Committee of the National Board for Wildlife under the Wildlife (Protection) Act, 1972, and must submit measures to minimize biodiversity loss. The Biological Diversity Act, 2002 also mandates prior approval from the National Biodiversity Authority for certain uses of biological resources, particularly involving corporations and foreign entities, and promotes conservation and sustainable use of biodiversity.

In addition, regulatory authorities like the Ministry of Environment, Forest and Climate Change (“MoEF”) may impose project-specific biodiversity offset conditions as part of the environmental clearance process, especially for large-scale projects in sectors such as mining, roads, hydropower, and infrastructure.

Therefore, India currently does not mandate BNG through any uniform legal provision. However, biodiversity impact assessments and compensatory measures are integral to environmental approvals.

Under the Indian law, companies face growing obligations to disclose environmental data, including water usage. The SEBI has mandated such disclosures through the BRSR framework.

The BRSR framework made effective from FY 2022–23, the top 1,000 listed companies (by market capitalization) are required to include detailed environmental disclosures in their annual reports under Regulation 34(2)(f) of the LODR Regulations, supported by SEBI’s circular no. SEBI/HO/CFD/CMD-2/P/CIR/2021/562 dated May 10, 2021. Under this framework, companies must provide detailed environmental disclosures, including:

1. Water withdrawal: total volume withdrawn, disaggregated by source (groundwater, surface water, municipal supply or desalinated water) and by type (freshwater vs. recycled).
2. Water consumption and intensity: water used across operations and efficiency ratios based on revenue or output.
3. Water discharges: volume and treatment status of wastewater discharged, with information on final discharge points (e.g., rivers, lakes, sewers).
4. Zero liquid discharge (“ZLD”): disclosure of corporate policies and compliance with ZLD practices, including investments in water reuse and recycling technologies.

In addition to SEBI’s requirements, industrial and infrastructure projects requiring environmental clearance under the EIA Notification (enacted under the Environment (Protection) Act, 1986), are legally obligated to report water usage as part of their compliance requirements. Project proponents must provide detailed information on:​

1. total water requirement and sources;
2. potential for water recycling and reuse;
3. water balance statements;
4. potential impacts on existing water users; and
5. measures for water conservation and management.

These disclosures are especially critical for water-intensive industries such as chemicals, textiles, manufacturing, and energy. While SEBI’s BRSR framework currently applies to the top 1,000 listed entities, it reflects a broader regulatory trend towards environmental accountability. Simultaneously, the EIA Notification mandates project-specific reporting on water use, reinforcing legal obligations at both corporate and project levels. Collectively, these obligations underscore India’s evolving legal landscape in favour of environmental, sustainability and responsible resource use.

As of now, India has not initiated any test cases involving product liability or environmental contamination related to perfluoroalkyl and polyfluoroalkyl substances (“PFAS”), commonly referred to as “forever chemicals”. These substances remain, largely, unregulated under the Indian environmental law, with no specific standards or liability framework governing their use, discharge, or remediation.

India is a signatory to the Stockholm Convention on Persistent Organic Pollutants (“POPs”) since January 13, 2006, which aims to eliminate or restrict the production and use of hazardous chemical substances globally. In 2009, the Stockholm Convention added Perfluorooctanesulfonic acid (“PFOS”) to its list of restricted substances. However, India has exercised its opt-out provision under the Stockholm Convention, choosing not to ratify the specific amendment related to PFOS. As a result, PFAS substances remain outside the purview of Indian environmental regulations.

That said, regulatory steps have been taken in the broader context of POPs. Through the Regulation of Persistent Organic Pollutants Rules, 2018, notified under the Environment (Protection) Act, 1986, India has banned the production, import, export, and use of seven POPs listed under the Stockholm Convention. However, PFAS compounds are not included in this list.

While India has not yet seen litigation on PFAS-related issues, growing global legal actions especially in the United States of America and Europe combined with increased international regulatory focus may influence future domestic policy. Indian regulators may consider incorporating PFAS into environmental compliance frameworks as scientific and public health concerns around these substances evolve.

India has developed a comprehensive regulatory framework to enforce circular economy principles across sectors. The legal mandate places extended producer responsibility (“EPR”) and end-of-life management duties on producers, importers, brand owners, distributors, and retailers. These obligations aim to ensure sustainable resource use, promote recycling, and mandate the integration of recycled materials in product manufacturing. The key legislations include:

(i) Plastic Waste Management Rules, 2016 (“PWM Rules”)

The PWM Rules mandate that the producers, importers, and brand owners (“PIBOs”) comply with EPR for plastic packaging. The PIBOs must register with the CPCB and fulfil annual EPR targets for collection, recycling, reuse, and environmentally sound disposal of plastic packaging. It introduces targets for minimum recycled content in plastic packaging, thereby promoting circularity in the supply chain.

(ii) Solid Waste Management Rules, 2016 (“Solid Waste Rules”)

The Solid Waste Rules place an obligation on manufacturers and brand owners of disposable products to create a mechanism for the collection and recycling of packaging waste. The entities utilizing non-biodegradable packaging are further required to establish take-back systems and promote the use of recycled materials in packaging production.

(iii) E-Waste (Management) Rules, 2022 (“E-Waste Rules”) 

Under these rules, producers of electrical and electronic equipment must fulfil EPR obligations by meeting recycling targets only through registered recyclers to ensure environmentally sound management of e-waste. The manufacturers, refurbishers, and bulk consumers are responsible for the collection, channelization, and environmentally sound recycling of e-waste. The refurbishers are required to collect and hand over e-waste generated during refurbishing to registered recyclers. The E-Waste Rules incentivize refurbishment and reuse, aligning with material recovery goals.

(iv) Battery Waste Management Rules, 2022

Under these rules, battery producers are subject to EPR obligations, requiring them to ensure the collection, recycling, or refurbishment of used batteries. They must meet prescribed collection and recycling targets for batteries introduced into the market and encourage the use of recycled materials in the production of new batteries.

(v) Construction and Demolition Waste Management Rules, 2024

On July 29, 2024, the MoEF issued the Construction and Demolition Waste Management Rules, 2024 (“2024 Construction Waste Rules”), in supersession of the Construction and Demolition Waste Management Rules, 2016. The 2024 Construction Waste Rules came into effect on April 1, 2025, and introduce the concept of EPR for builders or developers undertaking construction activity on a built-up area of 20,000 square meters and above. Similar to the existing EPR framework for plastic and electronic waste, builders or developers (referred to as ‘producers’ under the 2024 Construction Waste Rules) are required to register on the online portal managed by the CPCB and meet EPR targets for the recycling of construction and demolition waste generated by their projects. The producers achieving EPR targets will be eligible for EPR certificates, which can be adjusted against their recycling target for the current year or used to complete any leftover liability of the preceding years.

These legislations reflect India’s growing focus on circular economy principles, emphasizing resource efficiency, waste minimization, and material recovery. While the regulatory framework is still evolving, compliance with EPR obligations and mandatory recycling targets is gradually shaping a sustainable production and consumption ecosystem. Non-compliance with the legal framework attracts penalties, environmental compensation, and potential prosecution under the Environment (Protection) Act, 1986.

India has adopted a comprehensive regulatory regime to curb plastic pollution, primarily under the Environment (Protection) Act, 1986, and the PWM Rules. The legal framework encompasses prohibitions, EPR, certification requirements, and penalties. The PWM Rules serve as the principal regulatory instrument for plastic waste management in India, applicable across urban and rural areas, with local bodies and gram panchayats responsible for implementation. The key mandates include:

1. segregated collection and scientific disposal of plastic waste;
2. promotion of source reduction and reuse; and
3. prevention of littering and illegal dumping.

Pursuant to the Plastic Waste Management (Amendment) Rules, 2021, the MoEF imposed a ban, effective July 1, 2022, on specified single-use plastic items identified as having low utility and high littering potential. The ban covers the manufacture, import, stocking, distribution, sale, and use of products such as polystyrene and expanded polystyrene (thermocol). The Plastic Waste Management (Amendment) Rules 2024 mandate that manufacturers of compostable and biodegradable plastics must obtain certification from the CPCB. It also prescribes labelling and marking requirements to ensure proper product identification and traceability.

Further, under the PWM Rules, EPR for plastic packaging, notified in February 2022, is a legally binding obligation on PIBOs. The PIBOs are required to register on the CPCB’s centralized EPR portal and comply with annual targets for the collection, recycling, reuse, and end-of-life disposal of plastic packaging. They must also submit periodic compliance reports.

The non-compliance with the PWM Rules attracts strict penalties, including fines, prosecution, and environmental compensation determined by the CPCB or State pollution control boards (“SPCBs”). In cases of serious or repeated violations, penal consequences are imposed under the provisions of the Environment (Protection) Act, 1986.

The employers in India are required to ensure equality, diversity, and inclusion (“EDI”) in the workplace through compliance with various labour and anti-discrimination laws. The key legislations governing EDI obligations are as set out below:

1. Equal Remuneration Act, 1976 (“ER Act”) and rules framed thereunder: The employers are obligated to pay equal remuneration to men and women workers performing same work or work of a similar nature. The employers are also, while making recruitment or in promotions, training, or transfer, prohibited from discriminating based on gender for the same work or work of a similar nature except where employment of women in such work is prohibited or restricted by law. The ER Act also provides for penal actions in case of any violation/ non-compliance of its provisions. The BRSR format requires the eligible entities to disclose information related to the equal opportunity policy in place.
2. Rights of Persons with Disabilities Act, 2016 (“PwD Act”) and rules framed thereunder: Every establishment is required to frame a policy detailing measures proposed to be taken by it for persons with disabilities. If an establishment has more than 20 employees, the equal opportunity policy must include: (i) facility and amenities provided to persons with disabilities to assist them to effectively discharge their duties; (ii) a list of posts suitable for persons with disabilities; (iii) assistive devices, barrier-free accessibility and other provisions for accommodation; and (iv) appointment of a liaison officer by the establishment to manage the recruitment processes.
3. The PwD Act also mandates every government establishment to provide reasonable accommodation and appropriate barrier free and conducive environment to employees with disabilities. The employers must also ensure that persons with disabilities are not subjected to discrimination on the basis of disability in the employment, unless an exemption has been granted to such establishment by the government. The PwD Act also provides for penal actions in case of violation/ non-compliance of its provisions.
3. Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”) and rules framed thereunder: The employers are obligated to: (i) provide a safe working environment at the workplace; (ii) organise regular sensitization and awareness workshops and programmes for all employees; (iii) establish an internal complaints committee with 10 or more employees to address and resolve complaints of sexual harassment at the workplace; (iv) assist a female employee in case she decides to file a complaint; and (v) formulate and disseminate an internal policy for prohibition, prevention and redressal of sexual harassment. The POSH Act also imposes monetary penalties on the employer and may lead to cancellation of his licence or registration in case of any non-compliance with the provisions of the POSH Act.
4. Other laws promoting EDI at workplace:
   1. Constitution of India: Articles 14, 15, 16 and 39 provide for equality before law, prohibit discrimination on grounds of religion, race, caste, sex or place of birth, provide equality of opportunity for all citizens in employment and obligate the States to secure equal pay for equal work for both men and women, respectively.
   2. Transgender Persons (Protection of Rights) Act, 2019 and rules framed thereunder: It protects the rights of transgender persons and prohibits discrimination against them in employment, recruitment and promotion. It mandatorily requires designation of a complaint officer to deal with complaints in case of violation of provisions of the act and provides for monetary penalties and punishment in case of violation/ non-compliance of the provisions of the act.
   3. Maternity Benefit Act, 1961: It mandatorily provides twenty-six weeks of paid maternity leave to female employees, who have worked for a minimum period of 80 days, out of which not more than eight weeks should precede the expected date of delivery. It also provides a host of rights to an eligible employee during her maternity leave.
   4. Corporate Laws: Section 149 of the Companies Act mandatorily requires the specified class of companies to have at least, one woman director on the board of directors. Similarly, Regulation 17 of the LODR Regulations mandatorily requires the board of directors of a listed entity to have at least, one woman director.

Yes, the Indian laws impose legal obligations on employers to ensure fair treatment, health, and safety of employees in alignment with the ESG principles. The key legislations governing duties of employers to treat employees fairly and with respect are as set out below:

1. Minimum Wages Act, 1948 (“MW Act”): An employer is obligated to: (i) pay to the employees to whom the MW Act applies, wages at rate not less than the minimum rate fixed under the MW Act; and (ii) pay for the overtime in accordance with the rate fixed under the MW Act or otherwise by the government. The MW Act also empowers the government to fix the daily working hours of employees to prevent their exploitation. The MW Act imposes penalties on employers for violation/ non-compliance with its provisions.
2. State-specific Shops and Establishment Acts: These laws are enacted by individual States and aim to regulate the working hours, timely payment of wages, leave, holidays, and also provide for intervals for rest and meals.
3. Employees’ Compensation Act, 1923: The Employees’ Compensation Act, 1923, is a social security law that was enacted in India to offer financial support to workers who are injured, disabled, or die in incidents that occur during the course of their employment. It guarantees that in the event of an accident or occupational disease, the employer will provide workers or their families with the proper compensation. It applies to certain categories of employees working in hazardous or risky occupations and mandates that compensation be calculated based on the nature of injury, the employee’s wages, and age.
4. The Employees’ State Insurance Act, 1948: The Employees’ State Insurance Act, 1948 was enacted in India to provide financial and medical benefits to employees in case of sickness, maternity, disablement, or death due to employment injury. The Employees’ State Insurance Corporation has been established as a statutory body corporate vested with the responsibility for the administration and management of the employees’ state insurance scheme.
5. Factories Act, 1948 (“FA 1948”): It is the duty of every occupier under the FA 1948 to provide for and protect the health, safety and welfare of all workers while at work. The FA 1948 regulates the working hours and annual leaves of the workers. The occupier is also required to prepare a general policy with respect to the health and safety of the workers at work and bring such policy to the notice of the workers. The FA 1948 also imposes penalties in case of violation/ non-compliance of its provisions.

Further, the Occupational Safety, Health and Working Conditions Code, 2020 which will subsume 13 labour laws relating to safety, health and working conditions in India lays down duties of employers to treat their employees fairly and with respect, which is yet to be enforced.

Yes, under the MW Act, an employer is required to pay to the employees, on whom such act applies, a wage at rate not less than the minimum rate fixed under the MW Act. Article 43 of the Constitution of India provides that the State is required to ensure, to all workers, a ‘living wage’ and conditions of work ensuring a decent standard of life. Article 47 of the Constitution of India directs the State to raise the standard of living of its citizens.

(a) Are there any statutory duties to perform due diligence?

BRSR core is a sub-set of the BRSR, consisting of a set of key performance indicators/ metrics under the nine ESG attributes. The ESG attributes covering the human rights aspects are ensuring wellbeing and safety of the employees and enabling gender diversity in the business.

The BRSR format, which seeks disclosures against the nine principles of the “National Guidelines on Responsible Business Conduct” (“NGRBC”), issued by the Ministry of Corporate Affairs in 2019, require the eligible entities to disclose information regarding human rights including whether they include human rights principles in their contracts and business agreements, if they have a dedicated policy outlining human rights standards, internal mechanisms for redressal of complaints related to human rights issues and the scope of coverage of human rights due diligence conducted.

(b) Have there been any test cases brought against companies?

Yes, a few cases have been reportedly brought against companies:

1. One of the most significant cases is the Foxconn Case in which the National Human Rights Commission (“NHRC”) took a suo motucognizance of media reports that Foxconn, a major manufacturer of Apple devices in India, has systematically excluded married women from certain job roles, particularly during peak production periods at its assembly plant in Tamil Nadu, India. The NHRC while expressing dissatisfaction with the labour officials’ investigation, stated that they have failed to adequately scrutinize Foxconn’s hiring documents. The case is still ongoing.
2. The case of People’s Union for Democratic Rights v. Union of India (1982)¹ is a landmark public interest litigation that significantly expanded the understanding and enforcement of labour rights as fundamental rights under the Constitution of India. In this case, the People’s Union for Democratic Rights, an organization dedicated to protecting civil and democratic rights, brought to the attention of the Supreme Court of India, the exploitative and hazardous working conditions faced by the labourers employed in the construction projects for the 1982 Asian Games in Delhi. These workers, often migrant labourers brought from different parts of India, were subjected to non-payment of minimum wages, excessively long working hours, lack of basic amenities, and the illegal employment of children.

Footnote(s):

¹ 1983 SCR (1) 456.

(a) Are there any statutory duties to perform due diligence?

Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“LARR Act”) and the rules framed thereunder: The LARR Act mandates just and fair compensation and adequate provisions for rehabilitation and resettlement of the families affected by such acquisition. Prior to the acquisition of privately held land for ‘public purposes’, the appropriate government under the LARR Act is required to carry out a SIA in accordance with the LARR Act. Additionally, measures have been put in place to protect lands in the scheduled areas. The amount of compensation under the LARR Act is determined on the basis of various factors such as: (i) the market value of the land, as multiplied by a factor specified in the first schedule of the LARR Act, depending on whether the land is in a rural or urban area; (ii) the damage sustained by the landowner or the persons interested; (iii) the expenses incidental to the change in residence or place of business of the landowner or persons interested, if any; and (iv) the bona fide damage resulting from the decrease in profits from the land during the process of acquisition. In addition to the compensation, the affected families are to be given rehabilitation entitlements such as housing, alternative land parcels, and subsistence allowance, in accordance with the requirements of the LARR Act.

Environmental clearance: Prior environmental clearance is a statutory requirement for project/ activities covered under the schedule of the EIA Notification issued under Section 3 of the Environment (Protection) Act, 1986.

Corporate Social Responsibility (“CSR”) under the Companies Act: It mandates the companies meeting the prescribed financial thresholds to allocate a portion of their profits toward CSR activities, including environmental sustainability initiatives.

BRSR: An entity, to which the BRSR framework applies, is required to disclose information related to SIA and project for which rehabilitation and resettlement is being undertaken by such entity.

(b) Have there been any test cases brought against companies?

In Dinesh and Ors. v. State of Madhya Pradesh and Ors. (Civil Appeal Nos. 6441-6445 of 2024), the Supreme Court of India held that hearing of the objections under the LARR Act is a “sacrosanct act treated akin to a fundamental right”. Thus, the non-compliance of this mandatory requirement would vitiate the acquisition. The court further directed the respondents to consider and decide the objection as per law.

Greenwashing is the practice of conveying a misleading impression about the extent to which a company’s products, services, or overall operations are environmentally sound. This involves employing marketing and public relations tactics to present a more ecologically responsible image than is warranted by actual practices. As consumers’ demand for environmentally friendly options grows, some entities exploit this desire through deceptive means.

The Advertising Standards Council of India (“ASCI”), an independent, self-regulatory body, and has been actively working to prevent greenwashing where businesses make false or exaggerated environmental claims to mislead consumers. Recognizing the increasing consumer demand for eco-friendly products and sustainable services, ASCI introduced the Guidelines for Advertisements Making Environmental/Green Claims (“Greenwashing Guidelines”), which came into effect on February 15, 2024.

The Greenwashing Guidelines define greenwashing as “false, deceptive, or misleading environmental claims about products, services, processes, brands, or operations as a whole, or claims that omit or hide information, giving an impression that they are less harmful or more beneficial to the environment than they actually are”. Advertisers are now required to ensure that any green claims are factually substantiated with scientific data and credible evidence.

The Greenwashing Guidelines directly link misleading environmental claims to a violation of chapter I of the code for self-regulation of advertising content in India, which prohibits false or deceptive advertising. This move aligns with international trends, where regulatory bodies like the United Kingdom’s Advertising Standards Authority and the European Union’s Green Claims Directive have introduced similar crackdowns on misleading sustainability claims.

In addition to ASCI’s efforts, the Central Consumer Protection Authority (“CCPA”) has intensified its oversight. On February 20, 2024, the CCPA introduced the draft ‘Guidelines for the Prevention and Regulation of Greenwashing, 2024’, which aim to curb deceptive environmental marketing strategies used by companies to inflate sales and revenue. This builds upon the ‘Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022, which prohibit false or misleading advertisements under the Consumer Protection Act, 2019. The CCPA has the authority to impose fines, order corrections, and even ban advertisements that mislead consumers about a product’s sustainability.

While there have been multiple investigations into companies in the fast-moving consumer goods, fashion and energy sector for greenwashing their products, the regulatory regime in India for greenwashing is still at a nascent stage. The introduction of the CCPA guidelines and Greenwashing Guidelines are yet to see a robust implementation mechanism. In India, with the rising demand for eco-conscious consumerism, regulatory bodies are likely to adopt stricter enforcement in the near future. Companies are now advised to carefully vet their environmental claims and ensure full transparency to avoid potential legal and reputational risks.

At present, there have been no public incidents wherein the Indian competition or market regulatory authorities have either fined, prosecuted, or taken enforcement actions against businesses regarding sustainability claims about their products or services. However, the Competition Commission of India (“CCI”) has recently signalled towards growing focus on integrating sustainability and climate-conscious practices into enforcement of competition law. The CCI has hinted that in the near future, it may begin considering environmental friendliness as a ‘quality’ dimension when assessing competition among businesses. This means that green claims – such as environmentally friendly production methods, carbon footprint reduction, or sustainable sourcing – could become a factor in determining whether a company holds an unfair competitive advantage or is engaging in deceptive market practices.

This potential shift aligns with the global trends, where competition regulators in jurisdictions like the European Union and the United Kingdom have started investigating companies for greenwashing practices. For instance, the United Kingdom’s Competition and Markets Authority developed the ‘Green Claims Code’ to hold businesses accountable for sustainability-related marketing, while the European Commission has been taking active measures against misleading green claims.

As of now, there is no known legal precedent in India where a business has been specifically prosecuted or penalized for making unsubstantiated enterprise-wide sustainability commitments. However, with growing scrutiny on corporate ESG claims, regulatory bodies may soon start evaluating the credibility of such commitments to prevent misleading or deceptive practices.

While India is yet to witness direct litigation in this area, global trends indicate a rising legal focus on holding corporations accountable for their broad sustainability pledges.

Yes, the directors in India have a statutory duty to oversee environmental and social impacts, under: (a) the Companies Act; and (b) regulatory frameworks introduced by the SEBI.

1. Under the Companies Act: Under Section 166(2) of the Companies Act, directors have a statutory duty to act in the best interests of not just the company and its shareholders, but also its employees, the community, and for the protection of the environment. Section 135 of the Companies Act also mandates companies meeting the prescribed financial thresholds to allocate a portion of their profits toward CSR activities, including environmental and sustainability initiatives. The CSR Rules require the board of a company to actively monitor the ongoing CSR projects, ensuring that funds are utilized efficiently, and the CSR projects are executed within the approved timelines and year wise allocation. The board is also empowered to make necessary modifications for smooth project implementation.
2. SEBI’s ESG reporting: SEBI has introduced certain disclosure mandates to improve corporate transparency. The recent amendments to the LODR Regulations and the ‘Master circular  for compliance  with  the  provisions  of  the   LODR Regulations by the Listed Entities’: (i) have revised the provisions  regarding  ESG  disclosures  for  value chain; (ii) provide an option to undertake ‘assessment’ or ‘assurance’ for BRSR core and ESG disclosures for value chain; and (iii) introduce voluntary disclosure on green credits within the BRSR.

The timeline for the BRSR core assessment/ assurance is being carried out in phases starting with the top 150 listed entities in FY 2023-24, extending to the top 1,000 by FY 2026-27, however, the voluntary value chain ESG disclosures will start in FY 2025-26 and assessment/ assurance on a voluntary basis in FY 2026-27. Such entities must submit a BRSR, containing detailed ESG disclosures, as part of their annual report.

While there is no known precedent in India where directors have been prosecuted specifically for misrepresenting environmental and social impact data, the legal and regulatory framework is evolving to address corporate accountability in sustainability reporting. With increasing scrutiny on greenwashing and ESG misstatements, directors may face greater legal risks in the future if they fail to provide accurate sustainability disclosures.

In India, the entities covered under the ambit of BRSR framework are required to, as part of their ESG disclosures under the BRSR, report against sustainable investment criteria.

Additionally, the RBI issued the Draft Disclosure framework on Climate-related Financial Risks, 2024 in February 2024 (“Draft Disclosure Guidelines”), which mandates disclosures by the regulated entities on four thematic pillars – governance, strategy, risk management and metric and targets. These guidelines, when implemented, will be applicable to all: (a) scheduled commercial banks (excluding local area banks, payments banks and regional rural banks); (b) tier-IV primary (urban) co-operative banks; (c) all-India financial institutions; and (d) top and upper layer non-banking financial companies (NBFCs). Registered entities other than those mentioned above can adopt these guidelines on a voluntary basis.

The ‘governance’ pillar mandates that entities articulate their internal structures and procedural frameworks for the oversight of climate-related risks and opportunities, including the delineation of roles and responsibilities at the board and management levels. The ‘strategy’ pillar requires a comprehensive analysis of the actual and potential impacts of climate-related risks and opportunities on the entities’ business models, strategic planning, and financial projections, demanding a clear articulation of climate change’s influence on their operational landscape. The ‘risk management’ pillar necessitates the disclosure of methodologies employed to identify, assess, and manage these risks, ensuring the integration of climate considerations within their overarching risk management frameworks. Finally, the ‘metrics and targets’ pillar demands the establishment of measurable objectives and the tracking of progress in managing climate-related risks, including the disclosure of pertinent metrics and targets.

In India, RBI and SEBI, both have introduced frameworks aimed at integrating climate-related financial risks into their regulatory regimes.

As per the Draft Disclosure Guidelines, regulated entities encompassing commercial banks, NBFCs and other financial institutions, are required to systematically disclose their exposure to climate-related financial risks and opportunities.

The Draft Disclosure Guidelines is structured upon four fundamental pillars: governance, strategy, risk management, and metrics and targets (as explained in the answer above).

Acknowledging the inherent complexities and the evolving nature of climate risk assessment, the RBI proposes a phased implementation approach. This strategy permits regulated entities to adapt to the new regulatory requirements, develop the requisite capabilities, and ensure a seamless transition. The overarching objective of this framework is to cultivate a resilient and sustainable financial system within India which is, capable of effectively managing climate-related risks and supports the transition to a low-carbon economy. By mandating comprehensive disclosures, RBI endeavours to drive improved risk management practices and promote long-term investments in sustainable economic endeavours.

The BRSR core reporting also includes topics related to managing climate change related financial risks of the listed company as well as the value chain of such listed companies.

In India, companies/business are subject to statutory obligations to report their energy consumption under multiple legal frameworks aimed at promoting transparency and sustainability in energy usage.

1. The BRSR framework, mandated by the SEBI for the top 1,000 listed companies, requires disclosure of total energy consumption (segregated into renewable and non-renewable sources) and energy intensity per unit of revenue or production output.
2. Additionally, under the Companies Act, companies are mandated to include in their board report, a section on conservation of energy.
3. The Energy Conservation Act, 2001 imposes additional obligations, particularly on energy-intensive industries categorized as designated consumers, including those in aluminium, fertilizers, iron and steel, cement, pulp and paper, railways, power generation, and petrochemicals.
4. These entities are required to:
5. 1. Submit energy consumption reports to the Bureau of Energy Efficiency and relevant State-designated agencies.
   2. Implement recommendations provided by the accredited energy auditors for improving efficiency.
   3. Comply with specific energy consumption norms and targets under the PAT Scheme. The PAT Scheme operates on a market-based mechanism that allows designated consumers to earn ESCs for exceeding mandated efficiency targets, which can be traded on energy exchanges. Non-compliant entities are required to purchase ESCs to offset shortfalls.

By integrating these reporting mechanisms, India ensures that businesses are accountable for their energy consumption and actively contribute to the country’s sustainable development goals.

India does not provide a statutory obligation on business to report on EDI or gender pay gaps. However, various legal provisions safeguard against pay disparity and promote gender representation in corporate governance.

1. The ER Act strictly prohibits:
   1. Pay discrimination between men and women performing the same or similar work.
   2. Discrimination in recruitment, promotions, training, or transfers based on gender.
2. The Companies Act mandates:
   1. Certain prescribed classes of companies must appoint at least one-woman director on their board.
3. The LODR Regulations have further strengthened gender diversity norms for listed entities by requiring:
   1. All listed companies to have at least one-woman director on their board.
   2. The top 500 listed companies to have at least one independent director by April 1, 2019, and the top 1,000 listed companies (by market capitalization) to appoint at least one independent woman director by April 1, 2020.

While India does not yet mandate formal EDI or gender pay gap disclosures, these legal frameworks ensure gender parity and diversity in corporate leadership, gradually fostering a more inclusive work environment. These regulations also require businesses to maintain records and registers related to compliance and make them available for inspection annually or wherever there is a significant change.

India has stringent legal provisions prohibiting modern-day slavery, forced labour, and human trafficking, not just within supply chains but in all its forms, violation of any of these legal provisions attracts penal action. A few of the legal provisions covering slavery, forced labour and human trafficking are as set out below:

1. The Constitution of India explicitly prohibits human trafficking, begar (forced labour), and other similar forms of slavery/ forced labour.
2. Under the Bharatiya Nyaya Sanhita, 2023, forced labour, human trafficking and dealing in slavery are all penal offences which attract imprisonment and/or fine.
3. The Bonded Labour System (Abolition) Act, 1976 abolishes and prohibits bonded labour in all sectors, including supply chains and any violation of the provisions is an offence which attracts penalties and imprisonment.
4. The NGRBC lay down certain principles for business which include respecting and promoting human rights across operations and supply chains and ensuring ethical business practices which do not employ involuntary labour.

Under SEBI’s BRSR framework, the entities covered under the ambit of BRSR are also required to mandatorily disclose instances of any child and/or forced labour.

While India is still in its nascent stage in terms of evolving its ESG framework, over the next 12 months, significant legal developments are expected across the following ESG domains. This is a reasonable anticipation considering the trends and developments which have been explained earlier in this chapter.

(a) Environmental regulations:

Strengthening of the EPR framework to ensure stricter compliance in waste disposal. Increasing and enforcing mandatory collection and recycling targets for PIBOs. Regulatory bodies like the CPCB and SPCBs are expected to enhance their monitoring and enforcement mechanisms to ensure compliance and penalize non-compliance.

(b) Corporate ESG reporting and governance:

Expansion of BRSR to a wider set of companies beyond the top 1,000 listed entities. With more stringent ESG reporting requirements and specific guidelines on issues like greenwashing, regulatory bodies like SEBI, the CCPA, and potentially the RBI will likely increase their oversight and enforcement activities.

(c) Social and Labor law compliance:

1. Anticipated implementation of the labour code, which will streamline labour rights, workplace safety, and social security benefits. The implementation of these codes is expected to be carried out in phases, potentially starting with larger establishments and gradually extending to smaller ones.
2. Growing emphasis on gender diversity and boardroom representation, with SEBI likely to introduce additional governance mandates.

(d) Climate litigation and regulatory enforcement:

1. Increase in regulatory enforcement and litigation with the introduction of the Greenwashing Guidelines and the Guidelines for the Prevention and Regulation of Greenwashing, 2024.
2. With the introduction of the Draft Disclosure Guidelines, there will be an increased pressure on financial institutions to assess and disclose their exposure to climate risks.
3. Rising shareholder activism and investor-led litigation on ESG non-compliance and greenwashing claims.

Given these developments, there is a strong likelihood of increased enforcement actions and regulatory scrutiny, particularly in environmental compliance and corporate sustainability reporting. The judicial landscape is also expected to witness a rise in ESG-related disputes, particularly in the areas of carbon credits, environmental liability, and labour rights violations.