“Sustainability is not just about the environment. It is about making economies more efficient, companies more responsible, and growth more inclusive.” – Mr. Amitabh Kant
India stands at a critical juncture of balancing rapid economic development with the urgent need to address environmental challenges. In this context, Environmental, Social, and Governance (ESG) principles have evolved from being aspirational guidelines to essential components of corporate accountability and national policy. No longer a peripheral concern, ESG today forms the backbone of strategic decision-making for businesses operating within and beyond India’s borders.
With the shifting global trade patterns, energy security considerations, and reconfigured supply chains placing new demands on states and corporations alike, India is responding with a robust overhaul of its environmental regulatory regime. A wave of legislative reforms is currently reshaping compliance standards, strengthening oversight, mandating transparency, and aligning domestic environmental governance with globally accepted sustainability frameworks.
Few recent revisions in the environmental laws include Amendments to the Environmental Impact Assessment (EIA) framework, the introduction of the Draft Greenhouse Gases Emission Intensity Target Rules, 2025 (GEI Rules), and the implementation of the Environment (Protection) Second Amendment Rules, 2025. These developments underscore India’s commitment to integrating ESG considerations into its regulatory framework, thereby necessitating heightened compliance from companies operating within its jurisdiction.
A. Revisions to the Environmental Impact Assessment (EIA) Framework
The EIA process in India has traditionally served as a critical tool for assessing the environmental implications of proposed projects. It is an optimal tool that ensures the optimal use of the natural resources for the sustainable development.
In February 2025, the Supreme Court issued an interim stay on a Ministry of Environment, Forest and Climate Change (MoEF&CC) notification that sought to exempt certain projects from EIA requirements. This move was accompanied by new MoEF&CC guidelines aimed at streamlining consent processes for air and water pollution control legislations. These developments indicate a shift towards more rigorous environmental assessments and a reinforcement of accountability mechanisms for project developers.
B. Introduction of the Draft Greenhouse Gases Emission Intensity Target Rules, 2025
In April 2025, the MoEF&CC released the Draft GEI Rules, which propose the establishment of emission intensity targets for energy-intensive sectors and industries. These rules aim to operationalize the Carbon Credit Trading Scheme (CCTS) by setting baseline emissions for 2023-24 and defining gradual reduction targets for subsequent years.
The introduction of these industry specific targets signifies a move towards market-based mechanisms for controlling greenhouse gas emissions and aligns with India’s broader climate commitments. The ultimate objective is to push industries towards a low-carbon growth trajectory through reduction, removal or avoidance of GHG emissions.
More significantly, these Rules are instrumental in enabling India to fulfil its obligation under the Paris Agreement – reducing the emissions intensity of its GDP (i.e., energy consumption per unit of economic output) by 45% by 2030, relative to 2005 levels. The Target Rules can also be seen as a step made towards India’s aim for ‘panchamrit’ and net-zero carbon emission by 2070.
C. Implementation of the Environment (Protection) Second Amendment Rules, 2025
The Environment (Protection) Second Amendment Rules, 2025, introduced stringent standards for effluent discharges, fugitive emissions, and wastewater generation, particularly targeting industries such as the caustic soda sector. These rules enforce stringent norms for effluent discharge, such as limits on chloride, suspended solids, and pH levels, as well as tighter thresholds on fugitive and process emissions, including chlorine and hydrochloric acid. Further, phased compliance timelines offer industries a two-year window to meet some of the more advanced standards, particularly concerning legacy plants.
These regulatory shifts signal a definitive move towards pollution control through technological upgradation and operational efficiency. Industries will need to invest in low-emission infrastructure, adopt closed-loop water systems, and install real-time monitoring mechanisms. Non-compliance will not only trigger legal penalties but may also impact ESG scores and stakeholder trust. As ESG assurance becomes integral to regulatory reporting, these rules position environmental compliance not just as a legal obligation but as a strategic imperative for sustainable and responsible business in India.
D. Implications for Corporate ESG Compliance
The evolving regulatory landscape necessitates that companies operating in India, especially those in high-impact sectors, adopt robust ESG compliance strategies. The Securities and Exchange Board of India (SEBI) has mandated the top 1000 listed companies to disclose detailed ESG performance metrics through the Business Responsibility and Sustainability Report (BRSR) framework. Furthermore, SEBI requires third-party assurance of ESG disclosures, scaling up from the top 150 companies in FY2024 to the top 1000 companies by FY2027.
Parallelly, the RBI has released the ‘Framework for Acceptance of Green Deposits,’ effective from June 1, 2023. This framework encourages regulated entities to offer green deposits, with specific disclosure requirements to ensure that funds are allocated to environmentally sustainable projects. Banks are now expected to integrate environmental risk analysis into their credit decision-making processes, marking a shift towards climate-responsible lending strategies.
The evolving regulatory environment necessitates that companies operating in India, especially those in high-impact sectors, adopt robust ESG compliance strategies. Integrating ESG considerations into core business strategies is no longer optional but a strategic imperative. Companies must focus on aspects such as carbon emissions, water usage, employee welfare, and supply chain sustainability. Non-compliance can lead to penalties, reputational damage, and loss of investor confidence. Conversely, proactive ESG integration can enhance operational efficiency, attract responsible investments, and ensure long-term business resilience.
India’s 2025 environmental regulatory reforms reflect a concerted effort to align with global sustainability standards and address pressing environmental challenges. The amendments to the EIA framework, the introduction of the Draft GEI Rules, and the implementation of the Environment (Protection) Second Amendment Rules signify a paradigm shift towards stringent environmental governance. For companies, this underscores the imperative of embedding ESG considerations into their operational and strategic frameworks to ensure compliance, mitigate risks, and capitalize on emerging opportunities in a sustainability-focused economy.