ESG Regulations & Mandatory Disclosures: The Global Shift and the Rise of India & China

Introduction: The ESG Transformation Is Global, Urgent, and Inevitable

Environmental, Social, and Governance (ESG) considerations have transitioned from voluntary goodwill initiatives to regulatory imperatives. ESG performance is no longer measured only by a company’s sustainability report—it is increasingly tied to financial materiality, investor confidence, and global access to capital.

By 2025, ESG investments are projected to exceed $53 trillion globally (PwC), representing more than a third of total assets under management. Yet this rise also brings complexity, particularly around data consistency, assurance, and regulation.

While Europe and North America have led the charge, India and China are now stepping into leadership roles, creating ESG regulations tailored to their economic structures, political systems, and development priorities. Their moves will help define how ESG standards work in emerging and transitional economies.

1. Global ESG Regulation: From Voluntary Disclosure to Mandatory Compliance

In the past decade, the ESG landscape has shifted from voluntary frameworks like GRI (Global Reporting Initiative) and CDP (Carbon Disclosure Project) to government-mandated, enforceable disclosure regimes.

📊 Key Regulatory Milestones

Region	Regulation	Effective Date	Focus
EU	CSRD (Corporate Sustainability Reporting Directive)	2024–2026	Double materiality, third-party audits
US	SEC Climate Disclosure Rule	2024	Scope 1 & 2 emissions, governance, climate risk
UK	FCA ESG Rules	2022–2024	TCFD-based, mandatory for listed companies
Japan	Tokyo Stock Exchange ESG Framework	2021	Governance, environmental risk
Brazil	B3 Stock Exchange ESG Reporting Guidance	2022	Mandatory for major listed firms

🌎 Takeaway: ESG has moved from “nice to have” to non-negotiable in corporate strategy and regulatory compliance.

2. India’s ESG Framework: BRSR, BRSR Core & Policy Alignment

India’s ESG journey is methodical and increasingly comprehensive. The Securities and Exchange Board of India (SEBI) has designed a phased approach, using both voluntary frameworks and hard mandates to elevate ESG standards across listed entities.

🧾 Key Frameworks:

BRSR (Business Responsibility and Sustainability Report) – Mandatory since FY 2022–23 for the top 1,000 listed companies.
BRSR Core – Introduced in 2024 for standardized assurance, ensuring ESG data is auditable and comparable.

🧱 Structure of BRSR:

Pillar	Key Metrics
Environmental	GHG emissions (Scope 1 & 2), water intensity, energy usage
Social	Workforce diversity, occupational safety, community development
Governance	Board independence, anti-corruption, CSR policy implementation

🔍 Real Case: Tata Consultancy Services (TCS)

Achieved carbon neutrality in Scope 1 & 2 in multiple business units.
Over 36% of workforce are women as of FY2023.
Disclosed waste reduction KPIs and used integrated reporting standards aligned with GRI and TCFD.

🎯 India’s Policy Drivers for ESG

Net Zero by 2070: Nationally Determined Contributions (NDCs) under the Paris Agreement.
PLI Schemes: Emphasis on clean energy manufacturing and sustainability in industrial processes.
Investors’ Push: Domestic institutional investors are demanding ESG alignment for long-term value protection.
UN SDG Alignment: India’s ESG approach intersects heavily with the Sustainable Development Goals (SDGs), particularly gender equality, affordable energy, and climate action.

3. China’s ESG Playbook: Centralized, Tech-Driven, Global-Ambitious

China’s approach to ESG is deeply integrated into its national economic planning, but it diverges from Western ESG models in several key ways:

State-driven coordination rather than market-driven standard-setting
Emphasis on environmental and social order over governance liberalization
Leveraging technology—AI, blockchain, and satellites—for emissions monitoring and ESG verification

🏢 Real Case: PetroChina

PetroChina’s 2023 ESG report highlighted:

9% reduction in methane intensity
Implementation of a blockchain-based carbon footprint system
Investments in over 30 gigawatts of renewable energy capacity

🧠 Unlike India, which still relies on manual disclosures, China is racing ahead in tech-led ESG enforcement.

🧭 China’s Regulatory Backbone

CSRC ESG Guidelines for listed companies (2022)
Green Finance Taxonomy (aligned with EU’s to some extent)
Mandatory disclosures for high-emission SOEs in steel, cement, and petrochemicals

China’s “Common Prosperity” agenda also ties social equity goals into ESG mandates, focusing on anti-poverty, labor rights, and ethical tech development.

4. Comparing India & China on ESG Metrics

Category	India	China
ESG Framework	BRSR, BRSR Core	CSRC guidelines, Green Bond Principles
Disclosure Mandate	Top 1,000 firms	State-owned + pilot sectors
Assurance Mechanism	Third-party encouraged under BRSR Core	Limited, evolving
ESG Tech Adoption	Early stage	Advanced (AI, blockchain, satellites)
Board Gender Diversity Mandates	SEBI requires at least one woman director	No formal requirement
Scope 3 Emission Reporting	Not yet mandatory	Pilots in select sectors
ESG Integration in Lending	Early-stage green loans	Strong green finance enforcement by PBoC

5. Social & Governance Pillars: Often Overlooked, Increasingly Critical

🧍‍♀️ Social (S)

India: High emphasis on gender inclusion, skilling, and social impact projects.
- Example: Mahindra & Mahindra’s “Nanhi Kali” girl education initiative is embedded in its ESG framework.
China: Focused on job creation, rural development, and supply chain labor conditions.

⚖️ Governance (G)

India’s SEBI mandates board composition standards, risk disclosures, and whistleblower mechanisms.
In China, political control over corporate governance remains a challenge for ESG consistency, particularly in SOEs.

6. The Green Finance Boom in Asia

💰 India:

Green bond market crossed $20 billion in 2024
Major issuers: SBI, Power Finance Corporation, REC, IRFC
RBI is exploring sustainability-linked lending benchmarks

💹 China:

Over $80 billion in green bonds issued in 2023 alone
Green bonds support projects in solar, hydrogen, and clean transport
The People’s Bank of China (PBoC) uses ESG scores for credit risk models

📈 Both countries are leveraging capital markets to finance the energy transition.

7. Supply Chain Impact: ESG Beyond Borders

Many Indian and Chinese companies are deep within global supply chains, especially in textiles, auto components, electronics, and chemicals.

🔎 Investor Concern:

ESG reputational risk from poor working conditions or environmental violations in upstream suppliers
Western buyers now demand Scope 3 reporting and due diligence

📌 Example:

Apple’s supply chain audits in China have triggered ESG reforms in firms like Foxconn, which now publishes labor-related ESG metrics.
JSW Steel in India is investing in clean hydrogen to reduce embedded carbon in exports.

8. Startups, SMEs, and the ESG Compliance Gap

In India:

SEBI plans to launch “BRSR Lite” for smaller firms by 2025
But many startups still lack ESG literacy, risk frameworks, or compliance teams

In China:

ESG scoring is increasingly linked to loan approval for SMEs
Digital ESG passports are being piloted for startups to fast-track regulatory clearance

🌱 The challenge? Making ESG scalable and cost-efficient for smaller businesses.

9. Talent, Data & Assurance Gaps

A major constraint in both India and China is qualified ESG professionals. There is a widening gap between the demand for ESG talent and the supply of trained professionals capable of interpreting global frameworks like SASB, ISSB, and CSRD.

Data Challenges:

Inconsistent metrics across sectors
Lack of digitized, machine-readable ESG data
Greenwashing risk due to poor verification

Solution:

Capacity building via ESG certifications (e.g., CFA ESG, GARP SCR)
Mandatory digital submissions using XBRL or blockchain-based ledgers

10. Looking Forward: Three Plausible ESG Futures

🚀 Scenario 1: Asia Emerges as ESG Leader

India and China create joint ESG tech ecosystems and become standard-setters in emerging markets.

📉 Scenario 2: ESG Gridlock

Geopolitical tension and inconsistent standards lead to data fragmentation, undermining cross-border ESG investments.

🌐 Scenario 3: Global Harmonization

Through G20, ISSB, and trade agreements, ESG standards converge, enabling better comparability and capital flows.

11. Action Items: What Stakeholders Must Do

For Businesses:

Prepare for Scope 3 and supply chain disclosure
Shift from marketing-based sustainability to audit-ready ESG data
Align internal risk management with ESG KPIs

For Policymakers:

Accelerate ESG assurance rules
Mandate ESG integration in banking, procurement, and trade policy
Provide funding and ESG capacity-building for SMEs

For Investors:

Demand third-party verified ESG data
Use tech-driven tools like Sylvera, RepRisk, and Morningstar Atlas
Avoid overreliance on ESG scores without methodological transparency

Conclusion: The ESG Moment Is Now, and Asia Is Central

India and China are at the heart of the next phase in ESG evolution. While they differ in regulatory philosophies, both are making ESG compliance central to economic policy, global competitiveness, and sustainable development.

India is building a layered, transparent system through BRSR and green finance strategies.
China is leading in ESG technology integration and policy-backed enforcement.

For businesses, investors, and regulators, one truth stands clear: ESG is no longer about perception—it is about performance, accountability, and survival.

📚 References:

SEBI: BRSR Core Framework (2024)
CSRC: ESG Guidelines for Listed Firms (2023)
PwC ESG Outlook 2025
CDP Scope 3 Emission Gap Report (2023)
RBI Green Bond Framework
Infosys ESG Report (2023)
PetroChina Sustainability Report (2023)
ISSB Global Baseline Standards (2024)