Revolutionising the board governance of environmental, social and corporate governance: voluntary constitution of ESG committees by Indian listed companies

Wednesday 21 December 2022

Sharad Abhyankar

Khaitan & Co, Mumbai


Saranya Mishra

Khaitan & Co, Mumbai



Climate change scholars have progressed from climate ‘mitigation’ to climate ‘adaptation’ and have made it overtly evident that time for action for the environment was due yesterday but is still possible today. Without doubt, environmental, social and corporate governance (ESG) is taking centre stage as the need of the hour for both companies (individually and as a collective) as well as the boards which drive the companies. Adopting ESG principles and values is seen as the beacon of hope for the future and, also, as an embodiment of inter-generational equity principles.

Compliance and the law

In terms of the legal regime for ESG, it should be noted that there is no one consolidated law in India and the obligations are rather varied across different legislations. One major statutory ESG compliance in India for the top companies by market capitalisation is sustainability reporting. There is also a statutory compliance regarding corporate social responsibility (CSR) based on certain thresholds being met for companies in general.

Needless to say, the focus of attention is on the actions of the top companies, which increases the pressure on such companies to demonstrate their ESG commitments and claims. The standards expected from them are (more often than not) higher than the law requires, which would be fairly evident from the proxy advisory and shareholder activism.

Arguably, to this end or rather to show stronger commitment to ESG, a good number of blue-chip companies in India from diverse sectors have constituted ESG committees, either at board level, or management level, or cross-functional ESG committees, as can be seen from published reports from manufacturing giants Ashok Leyland, Bharat Forge and Hitachi; IT major Infosys; conglomerates Vedanta (including group company like Hindustan Zinc), Godrej and Welspun; telecom operator Bharati Airtel, real estate investment trusts Mindspace and Embassy; realtor Lodha; major pharmaceuticals Biocon and Glenmark; financial players Axis, HDFC, ICICI, RBL Bank and Bajaj Finance; and asset management companies UTI Mutual Fund and Nippon Life India.

Many other listed companies have also constituted ESG committees, including: Crompton, Raymond, Indiabulls Housing Finance, Vakrangee, Blue Dart, Syngene, Redington, Canara Bank, IIFL Finance, Indus Towers, Arvind Limited, Muthoot Finance, Shriram Transport, Transport Corporation of India Limited, Sona Comstar, VST Industries Limited, Happiest Minds, AIA Engineering, Affle, Dhanvarsha, Shree Cement, APL Apollo Steel Pipes and Balampur Chini Mills.

Some listed companies have rechristened the mandatory CSR committee to a combined CSR and ESG committee, as in the case of: Zydus, HCL, Indian Hotels Company (Taj hotel brand), Yes Bank, Nykaa, United Breweries, L&T Financial Services, Kotak Bank, SBI Cards, LIC Housing Finance, Future Lifestyle, CreditAccess Grameen,  FirstMeridian, Cyient and Tanla.

A few companies have done the same in respect of their risk management committees, for instance, RP-Sanjiv Goenka group’s Firstsource and Adita Birla group’s Hindalco. A couple of others have done the re-jig in nomenclature with respect to stakeholders relationship committees, as in the case of Persistent and Geojit.

Certain companies have also done virtue signalling by including ESG committee as an agenda item for their respective roadmaps for a more fulfilling ESG, for example: Phoenix Mills Limited (presentation to shareholders in September 2022); Indigo Paints (annual report for financial year 2021–22); and Aster (investor presentation in February 2022).

This voluntary constitution of ESG committees, as well as change in nomenclature of the statutory committees inter alia, emphasises the void for ESG planning and self-monitoring mechanism in Indian laws. Separately, constitution of such committee is a projected reflection of the ESG commitments of the company, as such committee has been established with the sole purpose of driving the ESG related aspects of and within the company. Based on the trend set up by major Indian listed companies, it would seem that ESG committees are the likely future of ESG governance in India.

However, in these rather woke times, it is also necessary to ‘be aware and beware’ of surface-level ESG efforts, often termed and reported as ‘greenwashing’, which is essentially an attempt by a company to publicise itself as an ESG champion without any substance or masquerading an untruthful eco-friendly front. In the context of the constitution of ESG committees vis-à-vis greenwashing, caution must be had for actual inputs and performance evaluation of such committee in planning, monitoring and authorising ESG in a company. ESG committees are much simpler to set up but daunting to be kept active and working.


In respect of Indian ESG regime, it will be interesting to see whether ESG committees will soon take the form of a statutory committee or will be left to India Inc to adopt voluntarily.