Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It ensures accountability, fairness, and transparency in a company's relationship with its stakeholders, especially through the oversight of the board of directors.
The Five Pillars of Corporate Governance , that support good corporate governance are:

• Fairness: treating all stakeholders equitably.
• Transparency: open and timely disclosure of relevant information.
• Responsibility: the obligation of the board to act in the best interest of stakeholders.
• Accountability: holding decision-makers answerable for actions and outcomes.
• Risk Management: identifying and mitigating potential threats to the business.^[1]

Responsibility, as a core pillar, goes beyond financial performance to include economic and social obligations. It means companies must act ethically and address environmental and social concerns as part of their governance strategy.[2] This includes contributing to economic development, reducing inequality, and managing ESG factors.

In Union of India v. R. Gandhi[3], the Supreme Court of India aptly observed that corporate governance is not merely a matter of compliance, but a commitment to values¹. This powerful statement underscores the broader responsibility of corporations to uphold ethical standards and build trust among all stakeholders. Today, this commitment goes far beyond adherence to statutory requirements. It reflects a holistic system of corporate behaviour, known as corporate governance, which ensures that businesses operate with accountability, fairness, and transparency.

Corporate governance refers to the set of processes, practices, and rules through which a corporation is directed and controlled. It includes mechanisms for monitoring the actions, policies, and decisions of corporations and their agents. Traditionally, corporate governance focused on protecting shareholder interests. However, its modern interpretation recognizes the importance of other stakeholders employees, consumers, governments, and communities.

In recent years, the term Environmental, Social, and Governance (ESG) has emerged as a critical extension of corporate governance. ESG captures the non-financial performance of a company in three domains. The Environmental component evaluates a firm's interaction with the natural world. The Social dimension examines its relationships with employees, customers, suppliers, and society. The Governance element reviews internal systems of control, ethical behaviour, and compliance with laws and codes.

Corporate governance and ESG are thus deeply intertwined. While corporate governance lays the foundation for ethical conduct, ESG strengthens its application by introducing quantifiable, stakeholder-focused metrics. Together, they redefine the role of businesses from mere profit-making entities to responsible corporate citizens. This integration ensures that long-term value creation is aligned with sustainable and inclusive growth.

In this context, the global focus on sustainability reporting has transformed rapidly. According to the International Sustainability Standards Board (ISSB), sustainability is defined as the ability for a company to sustainably maintain resources and relationships with and manage its dependencies and impacts within its whole business ecosystem over the short, medium and long term.[4] This definition reflects the growing pressure on businesses to not only generate profits but to do so responsibly, preserving environmental and social capital.

India's journey toward ESG-aligned governance began with the Ministry of Corporate Affairs introducing the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) in 2011. These guidelines aimed to inculcate responsible business conduct among Indian enterprises. The Securities and Exchange Board of India (SEBI) operationalized these guidelines through the Business Responsibility Report (BRR), initially mandated for the top 100 listed companies in 2012. [5] Over time, this threshold was expanded to include the top 500 firms.[6]

However, the BRR lacked the depth and global compatibility necessary to meet evolving investor and stakeholder expectations. To address these gaps, SEBI introduced the Business Responsibility and Sustainability Report (BRSR) in 2021. This comprehensive ESG disclosure framework became mandatory for the top 1000 listed companies by market capitalization from FY 2022–23. [7] BRSR represents a significant evolution in non-financial reporting in India. It provides a structured, standardized, and globally comparable format for ESG disclosures and aligns with global standards such as GRI, SASB, and TCFD.[8]

The BRSR format marks a pivotal shift from voluntary principles to enforceable metrics. It introduces two sets of disclosures: Essential Indicators, which are mandatory, and Leadership Indicators, which are voluntary but encouraged.[9] It also integrates ESG concerns into core business strategies, requiring firms to disclose data on emissions, waste, employee welfare, community engagement, and governance practices.[10]

This study seeks to analyze the transformation of ESG reporting in India through the BRSR framework. It evaluates whether BRSR enhances corporate transparency and accountability. It also explores how this framework contributes to the redefinition of corporate governance in India shifting from compliance-based models to value-based and stakeholder centric governance systems. In doing so, this paper aims to provide a critical analysis of BRSR's effectiveness, its alignment with global standards, and its potential impact on sustainable development in India.

Changing Dimensions Of Corporate Governance

Corporate governance has undergone significant transformation that are influenced by technological advancements and heightened environmental awareness. Traditionally , corporate governance centred on shareholder interests but now the modern governance encompasses a broader spectrum of stakeholders . It also integrates ethical considerations. it provides the environmental sustainability against the harm caused to environment and provide for the social responsibility for the achieving the social interest. The term corporate originates from the Latin word corpus, meaning body, which in the business context refers to a legal entity that is separate from its owners.[11]

The word governance stems from the Greek word kubernáo, meaning to steer or guide, and in modern usage, refers to the frameworks and processes for directing and controlling organizations.[12] Thus, corporate governance refers to the system by which companies are directed and controlled in accordance with established rules, norms, and ethical standards.[13] It ensures transparency, accountability, and fairness in a company's dealings with stakeholders.

Corporate governance focused primarily on protecting shareholder interests and ensuring profitability. However, contemporary governance has expanded its scope to encompass a broader range of stakeholders including employees, customers, regulators, communities, and the environment.[14]  It now integrates ethical decision-making, environmental sustainability, and social responsibility into the core of business conduct.[15] This paradigm shift reflects a deeper commitment to sustainability, particularly as corporate operations have had significant effects on the environment, such as pollution, resource depletion, and climate change.[16] In response, modern governance frameworks aim to prevent environmental harm and ensure that corporations fulfils their social responsibilities, such as inclusive employment practices, equitable treatment of stakeholders, and long-term value creation for society.[17]

Corporate governance has evolved to address the multidimensional challenges of a rapidly changing business environment. Traditionally centred on shareholder primacy, the governance model now reflects a stakeholder-centric approach encompassing environmental, technological, and ethical considerations.[18] The advent of the digital revolution has added layers of complexity to corporate operations, compelling companies to adopt adaptive and dynamic governance structures. With the proliferation of digital platforms, artificial intelligence (AI), and big data analytics, boards are required not only to innovate but also to oversee areas such as data privacy, cybersecurity, algorithmic transparency, and ethical AI deployment. [19] These elements must align with a company's core values and legal compliance standards, making digital responsibility a fundamental part of governance.[20]

Simultaneously, environmental sustainability has emerged as a critical concern that corporate governance can no longer ignore. Issues such as climate change, biodiversity loss, and resource scarcity demand a comprehensive reorientation of governance frameworks. [21] Corporations are now expected to move beyond mere compliance and incorporate sustainability into their operational DNA. This includes monitoring and disclosing carbon emissions, adopting renewable energy policies, engaging in sustainable supply chain management, and complying with global environmental regulations like the Paris Agreement. [22] Governance mechanisms increasingly focus on environmental risk assessment and mitigation, holding directors accountable for ecological impacts and long-term environmental performance. [23]

The integration of Environmental, Social, and Governance (ESG) factors into corporate strategies marks a paradigm shift toward holistic and ethical governance. ESG is no longer a voluntary or peripheral concern but a key determinant of corporate value, resilience, and legitimacy. [24] Investors, regulators, and civil society now scrutinize corporate ESG disclosures to assess long-term viability, ethical standing, and alignment with global sustainability goals. The incorporation of ESG into governance mandates boards to develop internal frameworks capable of managing complex, interrelated challenges such as social equity, community engagement, and environmental justice while maintaining profitability.[25] As a result, governance today is as much about navigating externalities and societal impact as it is about financial oversight and internal controls.

The Evolution And Institutionalization Of Esg In Corporate Governance

The concept of ESG Environmental, Social, and Governance has evolved from a niche consideration to a central component of corporate governance, driven by historical developments, market dynamics, and regulatory interventions. ESG refers to the set of criteria used to evaluate a company's operations and long-term sustainability based on its environmental stewardship, social responsibility, and internal governance practices.[26]

The Environmental aspect includes how a company interacts with nature, addressing issues like climate change, pollution, and resource efficiency; the Social pillar relates to relationships with employees, customers, and communities, focusing on equity, labor rights, and diversity; while Governance covers corporate ethics, board structure, transparency, and compliance. [27] These dimensions have become essential tools for stakeholders and investors seeking to assess the ethical and sustainable performance of companies beyond traditional financial indicators.[28]

1. Historical context of ESG

   • The roots of Environmental, Social, and Governance (ESG) considerations can be traced back to the broader movement of socially responsible investing (SRI) that emerged prominently during the 1960s and 1970s. This period was marked by growing public opposition to issues such as apartheid in South Africa, environmental degradation, and corporate complicity in social injustices, prompting investors and advocacy groups to screen investments based on ethical considerations rather than solely financial returns. The anti-apartheid divestment campaigns and the establishment of community development financial institutions in the United States signified the early institutionalization of non-financial metrics in economic decision-making.^[29]
      
   • During the 1980s and 1990s, the concept of Corporate Social Responsibility (CSR) began gaining traction, particularly in Europe, where businesses increasingly recognized their broader obligations towards society and the environment. The concept of CSR, however, remained largely voluntary and philanthropic in nature, often lacking binding standards or measurable outcomes.^[30] The transition from CSR to ESG occurred as global financial institutions began to seek standardized, data-driven approaches to evaluating corporate responsibility.
   • The formal introduction of the term 'ESG' occurred in the 2004 landmark report titled Who Cares Wins, published by the United Nations Global Compact in collaboration with major financial institutions. This report underscored the necessity of integrating ESG factors into capital markets for sustainable long-term performance and value creation.^[31] It emphasized that companies managing ESG issues proactively would enjoy a competitive advantage over time. This marked a significant departure from the previous era of optional CSR to a more integrated and risk-informed framework.^[32]
   • Parallel to this, the 2006 launch of the UN Principles for Responsible Investment (PRI) further entrenched ESG into global investment norms by encouraging institutional investors to incorporate ESG issues into their ownership policies and practices.^[33] These developments laid the foundation for ESG to evolve from a niche concern to a mainstream element of financial and legal governance discourse.
   • Today, ESG is no longer merely an ethical or public relations issue; it is a regulatory and fiduciary imperative. It is a lens through which corporate performance and compliance are scrutinized, involving duties under securities regulation, environmental law, labour standards, and governance codes, thereby embedding ESG firmly within legal and financial systems across jurisdictions.^[34]
     

2. Evolution through market and regulatory developments

   • The growth of ESG has been propelled by the rise of ethical investment funds, stakeholder activism, and the recognition of ESG factors as material to financial performance.
   • Regulatory bodies and standard-setting organizations have developed frameworks and guidelines to standardize ESG reporting and ensure accountability.
     

3. ESG in the Indian context

   In India, the Ministry of Corporate Affairs introduced the National Voluntary Guidelines on Social, Environmental, and Economic Responsibilities of Business in 2011, laying the foundation for ESG integration. The Securities and Exchange Board of India (SEBI) mandated the Business Responsibility Report (BRR) for the top 100 listed companies in 2012, later expanding its scope. In 2021, SEBI introduced the Business Responsibility and Sustainability Report (BRSR), aligning ESG reporting with global standards and making it mandatory for the top 1000 listed companies by market capitalization.

The Business Responsibility And Sustainability Reporting (Brsr) Framework In India

The Business Responsibility and Sustainability Report (BRSR) framework represents a significant advancement in India's ESG reporting landscape, marking a strategic evolution from the earlier Business Responsibility Report (BRR) regime. Notified by the Securities and Exchange Board of India (SEBI) through its circular dated May 10, 2021, the BRSR is mandated under Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) for the top 1000 listed entities by market capitalization.[35]

This statutory mandate requires companies to disclose their performance on nine Business Responsibility a Principles (as framed by the National Guidelines on Responsible Business Conduct, NGRBC) across environmental, social, and governance dimensions.[36]

The BRSR framework is bifurcated into Essential Indicators, which are compulsory and allow for benchmarking across industries, and Leadership Indicators, which are voluntary and intended to promote best practices. This aligns with global reporting standards such as the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-Related Financial Disclosures (TCFD), thereby enhancing India's ESG regime's comparability and reliability.[37]

Significantly, the BRSR requires granular disclosures on aspects like greenhouse gas emissions, energy and water consumption, workforce diversity, labour practices, community engagement, and anti-corruption measures. It also demands board-level oversight on sustainability issues, thereby integrating ESG into corporate governance structures. The regulatory intent is to enable long-term value creation while addressing environmental and social externalities. Furthermore, under Section 134(3)(m) of the Companies Act, 2013, companies are required to include particulars related to energy conservation and environmental impacts in their Board's Report, which complements BRSR requirements.[38]

The transition from narrative-driven CSR to measurable ESG metrics is evident in how BRSR links sustainability disclosures with financial performance and risk management. It strengthens investor confidence, enforces board accountability, and fosters stakeholder inclusivity, positioning ESG as a core pillar of responsible corporate conduct in India.[39]

1. Origin and Development of BRSR
   The BRSR framework was developed by SEBI to enhance the quality and comparability of ESG disclosures. It builds upon the National Guidelines on Responsible Business Conduct and incorporates global best practices, aiming to facilitate informed decision-making by investors and stakeholders.
2. Structure and Key Components
   The BRSR framework comprises three sections: General Disclosures, Management and Process Disclosures, and Principle-wise Performance Disclosures. It covers nine principles, including:
   • Ethics
   • Product lifecycle sustainability
   • Employee well-being
   • Stakeholder engagement
   • Human rights
   • Environmental protection
   • Policy advocacy
   • Inclusive growth
   • Customer value
3. Impact on Corporate Governance
   Positive Impacts:
   • Enhanced Transparency: BRSR mandates detailed ESG disclosures, promoting transparency and enabling stakeholders to assess corporate sustainability performance.
   • Strategic Alignment: The framework encourages companies to integrate ESG considerations into their core strategies, fostering long-term value creation.
   • Investor Confidence: Standardized reporting enhances investor confidence by providing consistent and comparable ESG data.
     
   Challenges:
   • Compliance Burden: Companies may face challenges in aligning existing reporting systems with BRSR requirements, necessitating capacity building and resource allocation.
   • Data Reliability: Ensuring the accuracy and reliability of ESG data remains a concern, highlighting the need for robust data management systems.
   • SME Inclusion: While BRSR is currently applicable to large listed companies, extending its applicability to small and medium enterprises poses challenges due to resource constraints.

Conclusion And Recommendations
The integration of ESG considerations into corporate governance, exemplified by the BRSR framework, marks a transformative shift towards sustainable and responsible business practices in India.

To further enhance the effectiveness of ESG integration, the following recommendations are proposed:
Firstly, capacity building must be prioritized. Companies should conduct regular training programs for corporate boards and senior management to enhance their understanding of Environmental, Social, and Governance (ESG) principles, disclosure obligations, and the implications of non-compliance. This will promote informed decision-making and effective implementation of sustainability strategies.

Secondly, technological integration should be leveraged to streamline ESG compliance. The use of digital platforms, data analytics, and AI-driven tools can significantly improve the accuracy, consistency, and efficiency of ESG data collection, analysis, and reporting. This will also help in aligning disclosures with global benchmarks.

Thirdly, stakeholder engagement must be strengthened. Firms should proactively engage with a diverse set of stakeholders investors, employees, communities, regulators, and consumers to ensure that corporate policies reflect broader social and environmental expectations. This will reinforce trust and long-term value creation.

Fourthly, policy support is essential, particularly for small and medium enterprises (SMEs). The government and regulatory authorities should frame incentive-based schemes, tax benefits, and simplified reporting frameworks to support ESG integration among SMEs, which often lack the resources of larger corporations.

Lastly, continuous improvement in ESG frameworks is necessary. Existing ESG disclosure standards and governance mechanisms must be regularly reviewed and updated to incorporate emerging global standards, industry-specific risks, and sustainability challenges, thereby ensuring dynamic responsiveness and global relevance.

By embracing these recommendations, Indian corporations can strengthen their governance structures, enhance sustainability performance, and contribute to the broader goal of inclusive and sustainable development.

End Notes:

1. Siddharth Rawat, Independent Director: A Significant Pillar of Corporate Governance, 7 Commonwealth Law Journal 524–549 (2021).
2. Kishinchand Poornima Wasdani, et al., Impact of Corporate Governance on Organisational Performance of Indian Firms, 14(2) Indian Journal of Corporate Governance (2021).
3. Union of India v. R. Gandhi, (2010) 11 SCC 1.
4. IFRS Foundation, ISSB Describes the concept of sustainability, available at: https://www.it's.org/news-and-events/news/2022/12/issb-describes-the-concept-of-sustainbility/ (last visited April 22, 2025).
5. Ministry of Corporate Affairs, National Voluntary Guidelines on Social, Environmental and Economic Responsibility of Business, (2011).
6. SEBI, circular on Business Responsibility Reports, (2012), available at: https://www.sebi.gov.in/legal/circulars/jul-2012/business-responsibility-reports_23620.html.
7. Ibid.
8. Id.
9. Ministry of Corporate Affairs, National Voluntary Guidelines on Social, Environmental and Economic Responsibility of Business, 2011.
10. SEBI, Circular on Business Responsibility Reports, 2012, available at: https://www.sebi.gov.in/legal/circulars/jul-2012/business-responsibility-reports_23620.html
11. R.C. Mishra, Corporate Law and Governance 12 (Eastern Book Company, Lucknow, 2020).
12. Adrian Cadbury, Report of the Committee on the Financial Aspects of Corporate Governance, London: Gee Publishing, 1992 2.5.
13. Union of India v. R. Gandhi, (2010) 11 SCC 1.
14. Mallin Christine A., Corporate Governance, Accountability and Social Responsibility, 39 Journal of Business Ethics 233 (2002).
15. Ministry of Corporate Affairs, National Guidelines on Responsible Business Conduct, (2019), available at: http://www.mca.gov.in/Ministry/pdf/NGRBC_13032019.pdf
16. Ceres, Running the Risk: How Corporate Boards can Oversee Environmental, Social and Governance Issues, (2019), available at: https://www.ceres.org (last visited May 9, 2025).
17. OECD.G20/ORCD Principles of Corporate Governance, Paris: OECD Publishing, 17 (2015).
18. Supra note 13 at
19. Supra note 17 at
20. Supra note 16 at
21. Supra note 15 at
22. United Nations Framework Convention on Climate Change, Paris Agreement, 2015, available at: http://unfccc.int/process-and-meetings/parisagreement (last visited May 9, 2025).
23. Sanjeev Goyal, Corporate Governance In The Era Of Climate Crisis: A Sustainability Perspective, 6 Company Law Journal, 42–57 (2023).
24. Supra note 4 at
25. Mallin Christian A., A Corporate Governance, Accountability And Social Responsibility, 39 Journal of Business Ethics 233 (2002).
26. International Finance Cooperation, Environment, Social And Governance (ESG) Standards, available at: http://www.ifc.org/en/what-we-do/cross-cutting-topics/environment-social-governance (last visited May 1, 2025).
27. United Nations Principles for Responsible Investment, What Is ESG?, available at: http://www.umpire.org/esg-issues (last visited April 21, 2025).
28. Shyam Saran, ESG in India: Beyond Compliance to Leadership, 88 Indian Journal of Corporate Governance 223 (2021).
29. Peter Kinder, Socially Responsible Investing: A Practitioner's Perspective, 44 Journal of Business Ethics 217–226 (2003).
30. Elisabet Garriga and Domenec Mele, Corporate Social Responsibility Theories: Mapping the Territory, 53 Journal of Business Ethics 51–71 (2004).
31. United Nations Global Compact, Who Can Win: Connecting Financial Market to a Changing World (2004), available at: https://www.unglobalcompact.org/docs/issues_doc/Financial_markets/who_cares_who_wins.pdf (last visited May 9, 2025).
32. Ibid.
33. Supra note 27 at
34. Supra note 31 at
35. SEBI, Circular on Business Responsibility and Sustainability Reporting by Listed Entities, May 10, 2021, available at: https://www.sebi.gov.in/legal/circulars/may-2021.html (last visited May 9, 2025).
36. Ibid at
37. Id.
38. Companies Act, 2013 (Act No. 2 of 2013), s. 134(3)(m), read with Companies (Accounts) Rules, 2014.
39. Ibid.