From disclosure to accountability: a critical analysis of India’s ESG architecture

Abstract

Over the past fifteen years, India's ESG architecture has evolved through four distinct regulatory phases, from voluntary National Voluntary Guidelines to mandatory Business Responsibility and Sustainability Reporting (BRSR) and, most recently, to the partially assured BRSR Core framework. While this progression has substantially enhanced disclosure quality, this paper argues that it has not produced genuine corporate accountability. Drawing on institutional decoupling theory and a longitudinal empirical design, we analyse BRSR filings for the top 89 NSE-listed companies across three consecutive financial years (FY 2022-23 to FY 2024-25). Mean Disclosure Quality Scores rose by 41.4% over the study period, driven primarily by the mandatory assurance requirement introduced under BRSR Core. Substantive ESG Outcomes (measured across emissions intensity, workforce diversity, grievance resolution, and value chain accountability) improved at less than half that rate. The resulting Decoupling Gap is 72.7% wider in FY 2024-25 than at the BRSR baseline, and mandatory assurance, rather than closing this gap, was initially associated with its widening.

Three structural causes are identified: fragmentation of ESG obligations across SEBI, MCA, and environmental regulators; the absence of outcomebased enforcement; and the persistent disconnect between mandatory CSR expenditure under Section 135 of the Companies Act, 2013 and performance-driven ESG governance under the BRSR. To close this gap, the paper proposes three targeted reforms: integration of ESG obligations into a dedicated chapter of the Companies Act; amendment of directors' fiduciary duties under Section 166 to impose an operational duty to engage with material ESG risks; and establishment of a Unified ESG Oversight Authority with turnover-based sanctions. Until disclosure is backed by legal consequence that attaches to outcomes rather than to reporting, India's ESG framework will continue to produce sophisticated reporters without producing meaningfully better performers.