The year 2025 marked a paradoxical year for ESG globally. While regulators in the United States and Europe softened their tone on environmental, social, and governance (ESG) rules amid political pushback, India quietly moved in the opposite direction.
The global ESG narrative:
Interestingly, over 40 ESG regulations emerged in 2025.
India aggressively tightened its ESG framework, notably through SEBI’s BRSR enhancements and operationalization of the Carbon Credit Trading Scheme in June 2025. It enforced intensity-based targets on nine sectors like cement and steel, with penalties for non-compliance, signaling robust regulatory ambition. India ranked third with seven mandates.
On the other hand, Europe led with 12 frameworks, including the EU taxonomy and CSRD extensions to high-impact SMEs requiring Scope 1-3 verified reports (fines to €10M). The US SEC finalized climate disclosures for firms with > $500M market cap. China also introduced several key ESG regulations in 2025, transitioning from voluntary guidelines to mandatory frameworks, including the Emissions Trading Scheme (ETS) covering 60% of emissions and Green Finance Updates.
Global retraction:
Several regions diluted ESG mandates in 2025. The US SEC delayed climate disclosure rules for large filers until 2026, citing compliance burdens. And 15 US states enacted anti-ESG laws restricting public fund investments.
Europe’s CSRD faced a two-year postponement for non-EU firms via the “Stop-the-Clock” mechanism, with only 40% of covered entities meeting initial deadlines due to verification complexities. Globally, ESG fund inflows dropped 25% year-over-year, reflecting investor skepticism.
| Region | Key Retraction | Impact Data |
| US | SEC delays; 15 anti-ESG laws | 60% funds paused ESG tilts |
| Europe | CSRD 2-year delay | 40% compliance rate |
| Global | ESG AUM growth slowed to 5% | Inflows -25% YoY |
India’s counter trend:
India (SEBI) significantly tightened ESG regulations in 2025 through enhancements to the BRSR framework. It introduced seven new ESG mandates, with BRSR Core mandating third-party assurance on 42 KPIs like absolute greenhouse gas emissions (Scope 1, 2, and phased-in Scope 3), granular water usage in stressed regions, biodiversity impact assessments, and detailed social metrics—from median wage gaps to LGBTQ+ inclusion policies. This is mandated for the top 250 listed firms from FY2024-25, with plans to cover the top 1,000 by 2027.
Key 2025 changes also include green credit disclosures for entities and top 10 value chain partners, plus Scope 3 emissions on a comply-or-explain basis from FY2025-26. SEBI allowed flexible assessment or assurance for BRSR Core to cut costs, per Industry Standards Forum guidelines. Value chain disclosures require ESG data from partners covering 75% of purchases/sales, starting voluntarily. These build on FY2024-25 mandates, simplifying initial value chain reporting while phasing in rigor.
The framework now explicitly aligns with the International Sustainability Standards Board (ISSB) and the European Union’s CSRD—a move designed to reduce duplication for multinationals. This presents a clear signal to foreign investors that Indian ESG data is globally comparable.
SEBI also sharpened its oversight in 2025 by approving 18 ESG Rating Providers (ERPs) like CRISIL and CareEdge. Under a July Master Circular, it mandated methodology transparency, conflict-of-interest disclosures, and annual audits to curb inconsistencies across the 100+ global raters.
Result: compliance rose to 88% among the top 1,000 firms, up from 50% in 2022, driven by penalties up to ₹1 crore for non-reporting. The Carbon Credit Trading Scheme covered nine high-emission sectors, targeting 5% intensity reductions by 2030.
| Metric | 2022 Baseline | 2025 Achievement |
| Top Firms Reporting | ~50% | 88% |
| BRSR Core Assurance (Top 250) | None | Mandatory |
| Carbon Market Sectors Covered | Voluntary | 9 Mandatory |
This tightening propelled India’s ESG index scores up 12% in 2025, outpacing global averages despite persistent greenwashing risks. The ESG investing market is projected to grow at a CAGR of 23.3% from 2025-2030, outpacing many global peers. The NIFTY 100 ESG Index showed resilience and growth, reaching approximately ₹10,946 crore. The MSCI India ESG Broad CTB Select Index delivered competitive annualized returns (e.g., 10.73% vs. 11.22% in 2024).
Loopholes:
The BRSR lacks comprehensive third-party verification beyond Core, enabling selective disclosures and greenwashing.
For example, companies hide polluting activities via non-polluting sectors. Surveys show 41% of claims are misleading pre-2025, with only 29% assessing supplier ESG. As an instance, corporates exploit questionnaire lapses, omitting details in 28 reports studied by CSE, despite public data mandates. State variations (e.g., Maharashtra’s real-time monitoring vs. others) that create multi-location compliance gaps.
In addition, the unlisted gap is huge. Thousands of unlisted companies, including large enterprises, remain outside the BRSR’s scope, creating a significant transparency vacuum.
Our take:
Sustainability and economic growth are not just compatible, but interdependent. India’s push runs counter to the global trend, but it isn’t irrational. Because climate risk is not an abstract concept in India—it’s a lived reality. From water scarcity to extreme heat, environmental factors directly threaten economic stability.
As the global debate on ESG grows louder, India’s experiment will serve as a crucial test case. Can a large, developing economy turn sustainability reporting into a tool for resilience—or will it become another bureaucratic checkbox?
For sure, success will depend not on rulebooks, but on building capacity across supply chains, ensuring credible oversight, and fostering a culture where ESG is seen not as a compliance burden, but as a business imperative.
