Study flags sector-specific gaps in India’s ESG push

A collaborative research by Kerala University and the Indian Institute of Forest Management, Bhopal, which analysed how Indian companies are adapting to the mandatory Business Responsibility and Sustainability Reporting (BRSR) regime has found that managers across leading firms support Environmental, Social and Governance (ESG) integration. However, they continue to face challenges due to the absence of sector-specific reporting frameworks and high implementation costs.

The report, published in the international journal ’Corporate Social Responsibility and Environmental Management’, draws on in-depth interviews with senior executives from banking, manufacturing and service sectors.

The findings of the study indicated that banking and financial institutions lead the corporate landscape in regulatory compliance and reporting quality, though they struggled with measuring environmental impact indicators. Manufacturing firms, which led in actual implementation of environmental initiatives, faced substantial challenges in translating these efforts into standardised reports. The service sector emerged as the most challenged by grappling with framework adaptation issues.

Concerns

Managers of several Indian firms acknowledged strong enthusiasm for ESG integration. However, many expressed uncertainty about short-run financial returns. The study also recorded widespread concern over high upfront investments in renewable energy, waste management systems, electrification and other sustainability projects, which requires multi-year break-even periods.

Notwithstanding such challenges, the companies held that ESG conformity is increasingly essential for attracting global investors. While international investors are actively seeking ESG-aligned Indian firms, domestic retail investors remain largely indifferent, the study finds.

According to the principal investigator Biju A.V., Associate Professor of the Commerce Department at Kerala University, the research team has proposed the need for an ‘Emerging Economy ESG Implementation Framework’ that accounts for sector-specific realities in line with the country’s varied industrial landscape.

The present one-size-fits-all BRSR framework, the researchers opine, does not adequately address the unique operational contexts of different sectors.

Ambili Jayachandran, Commerce Department, Kerala University, and Aghila Sasidharan, Indian Institute of Forest Management also collaborated in the study.