As we close 2025, the era of ESG-as-a-Reporting-Exercise has officially ended.
For years, the Indian C-suite treated ESG as a desk job—a matter of filling out BRSR spreadsheets to satisfy SEBI. While a high ESG score remains a critical benchmark for transparency and investor trust, the industry is realizing that the next phase of impact goes beyond the scorecard.
In 2026, the focus shifts from the spreadsheet to the shop floor: a score alone cannot heat a zero-carbon furnace, fuel a heavy-duty hydrogen truck, or secure a resilient mineral supply chain.
The past twelve months have been a grueling lesson in the difference between setting a target and securing a transition. For the Indian industry, 2025 was the Year of the Audit, where the gap between policy intent and ground-level infrastructure became glaringly obvious.
India, while leading global growth, is also facing intense challenges in controlling pollution, managing industrial waste, and oiling the wheels of circularity. In many sectors, the steps taken so far appear too little given the scale of the crisis. However, the growing realization of the root causes and the renewed focus on tangible action is making the journey worth it. To navigate this pivot, we have identified the eight critical structural pillars where India’s green intent must now meet industrial reality.
1. The Stubble-to-Fuel Gap: Solving the Shortfall
The air quality crisis in North India is finally being treated as a logistics problem rather than just a moral one. This is where the 2026 pivot begins.
The Problem: FY25 was the year the biomass mandate hit the wall of reality. While the 5–7% co-firing target remains the North Star, the Association of Power Producers (APP) highlighted a persistent 30% deficit in torrefied pellets this year.
The 2026 Shift: Generators aren’t resisting change; they are starving for fuel. The focus must pivot from punitive fines to Biomass Hubs that treat crop residue as a commodity, feeding both the power sector (pellets) and the transport sector (Compressed Biogas – CBG).
2. BRSR Core: The MSME Scope 3 Squeeze
If 2024 was about the top 1,000 companies, 2025 was the year the Scope 3 ripple effect reached the MSME tier.
The Connection: Global OEMs are now demanding carbon data from their smallest suppliers. For a small foundry in Kolhapur, ESG Readiness is the new ISO Certification.
Investment in Data: We cannot expect an MSME to have the ability to invest in high-end data infrastructure or Big Four consultants. The 2026 mandate is data democratization—affordable, standardized SaaS tools that allow suppliers to report carbon footprints as easily as they file a GST return.
3. Green Logistics: Cracking the Mid-Mile
India’s last-mile delivery is winning the EV race, but 2025 exposed the mid-mile (heavy trucking) as the real carbon fortress.
Infrastructure: 55-toner trucks cannot run on urban chargers. The 2026 roadmap requires “Green Freight Corridors” integrated with the PM Gati Shakti plan, utilizing Megawatt Charging Systems (MCS) and LNG bunkering stations.
4. Critical Minerals: From Mining to DNA
India’s Lithium Rush of 2024 met the Refining Reality of 2025.
The Bottleneck: While India has secured significant mining blocks, we are simply swapping oil dependence for mineral dependence if we don’t refine them locally.
2026 Priority: Mining is huge, but refining is the current bottleneck. The next twelve months will be a race to build the chemical plants that turn raw ore into battery-grade DNA. Without local refining, our gigafactories remain kit-assembly shops.
5. Green Hydrogen: From MoUs to Molecules
2024 was the year of the Announcement; 2025 was the Initiation of these massive plans.
The Challenge: With over $200 billion in MoUs, the industry is now moving from paper to physical assets. To make green hydrogen viable in 2026, India must solve the electrolyzer manufacturing gap.
The Goal: The real win will be the first 100,000 tonnes of physical delivery to the fertilizer and refinery sectors.
6. Carbon Markets & The CCUS Leap
The sunset of the PAT scheme has given way to the Carbon Credit Trading Scheme (CCTS).
The New Approach: While water neutrality has been a manufacturing standard for large firms since 2015, the new frontier is carbon capture, utilization, and storage (CCUS).
The Dividend: Companies that over-delivered on energy efficiency are sitting on a green dividend. In 2026, we expect high-volume trades on the national exchange as carbon becomes a legitimate asset class.
7. Governance: Climate Risk is a Fiduciary Duty
The boardroom conversation changed in 2025. ESG has moved from the Sustainability Committee to the Audit Committee.
Liability: With SEBI’s tightening grip on greenwashing, directors are now personally liable for the integrity of climate disclosures.
Resilience: In 2026, climate competence will be the most sought-after skill for independent directors. Boards are no longer just asking, Are we green?—they are asking, Are we resilient against a $100/ton carbon tax?
8. The IEX Reality: A Market for Attributes
The low-hanging fruit of ESG—like switching to LED lights—has been picked. Some suggest the Renewable Energy Certificate (REC) market is saturated, but IEX data (Dec 2025) tells a different story.
Market Note: REC trading volumes saw a 39% YoY increase in late 2025, with clearing prices stabilizing around ₹370/REC. This indicates that while floor prices have shifted, the demand for green attributes is actually accelerating as companies race toward their 2030 targets.
Outlook 2026
As we look toward 2026, the next phase of India’s transition requires deep-tech investment and massive logistical coordination. The infrastructure being built in the shadows of 2025 will define the winners of the 2030 net-zero race.
Stay tuned to ESGNews.earth as we track the molecules, the mandates, and the movers shaping India’s sustainable future.
