ESG stands for Environmental, Social and Governance: the three dimensions used to describe how a company manages its environmental impact, its relationships with people, and how it is governed and controlled. ESG is a lens for assessment and disclosure, not a single law and not a single score. Heading into 2026, the practical question for compliance teams is narrower than the label suggests: which disclosures are legally required, which frameworks are voluntary, and which deadlines have moved.
The 2026 picture has three moving parts. In India, the Securities and Exchange Board of India (SEBI) has consolidated the rules for ESG rating providers in a Master Circular dated 11 July 2025. In the European Union, the Corporate Sustainability Reporting Directive (CSRD) timeline was reset by a “Stop-the-Clock” Directive adopted on 14 April 2025. And across Indian listed companies, a persistent gap in value-chain emissions disclosure was measured by the Council on Energy, Environment and Water (CEEW) and the Indian Institute of Corporate Affairs (IICA) in November 2025. This explainer sets out each in turn.
Key takeaways
- ESG covers three pillars: Environmental, Social and Governance. It is a framework for disclosure, not one statute.
- In India, mandatory ESG-linked reporting runs through Business Responsibility and Sustainability Reporting (BRSR) for the largest listed companies. Frameworks such as GRI, ISSB and ESRS are voluntary or EU-facing.
- SEBI’s Master Circular of 11 July 2025 governs ESG Rating Providers. CRISIL ESG Ratings and Analytics was the first SEBI-registered provider, approved 25 April 2024.
- The CSRD “Stop-the-Clock” Directive, adopted 14 April 2025, left Wave 1 unchanged, moved Wave 2 reporting to 2028 and Wave 3 to 2029.
- Per the CEEW-IICA report of November 2025, 781 of India’s top 1,000 listed companies disclosed Scope 1 and Scope 2 emissions, but only 268 reported Scope 3.
What ESG covers in 2026: the three pillars, plainly
ESG groups a company’s non-financial performance into three pillars. The pillars are stable year to year; what changes is the regulation built on top of them.
- Environmental: emissions, energy, water, waste, and resource use.
- Social: workforce, health and safety, communities, human rights, and the supply chain.
- Governance: board structure, ethics, transparency, risk management, and data protection.
A company measures its position against these pillars and discloses the result against a chosen framework. That disclosure activity is separate from rating. A rating is a score or grade assigned by an independent provider from disclosed and public data. The two are different activities performed by different parties, a distinction that matters for every point below. The frameworks that compare these pillars in depth are set out in the ESG guide.
Mandatory versus voluntary ESG reporting in 2026
No single “ESG law” governs Indian companies, and ESG reporting is not mandatory for unlisted companies. The legal obligations attach to specific categories of listed entity; the widely used frameworks around them are voluntary standards a company adopts by choice.
In India, the mandatory strand runs through Business Responsibility and Sustainability Reporting (BRSR), the SEBI-defined disclosure for the largest listed companies. The scope, phasing and assurance detail sit on the dedicated BRSR page. The voluntary and EU-facing frameworks are distinct:
- GRI (Global Reporting Initiative): the most widely used voluntary standards. Per the KPMG Survey of Sustainability Reporting 2024, 77 per cent of the world’s 250 largest companies report with GRI.
- ISSB (International Sustainability Standards Board): the global baseline, comprising IFRS S1 for general sustainability disclosures and IFRS S2 for climate. The earlier Sustainability Accounting Standards Board (SASB) and Task Force on Climate-related Financial Disclosures (TCFD) frameworks are now consolidated under the ISSB.
- ESRS (European Sustainability Reporting Standards): the standards that sit under the EU CSRD.
| Strand | Nature | Scope |
|---|---|---|
| BRSR (SEBI) | Mandatory | Largest listed companies in India |
| GRI | Voluntary | Global, most widely adopted standards |
| ISSB (IFRS S1, S2) | Voluntary global baseline | Sustainability and climate disclosure |
| ESRS | Mandatory for entities in CSRD scope | EU-facing reporting |
The SEBI ESG rating framework: the Master Circular of 11 July 2025
ESG Rating Providers (ERPs) in India are regulated by SEBI through a chapter inserted into the SEBI (Credit Rating Agencies) Regulations, 1999, effective 4 July 2023. Those rules are consolidated in the Master Circular for ESG Rating Providers, reference SEBI/HO/DDHS/DDHS-POD-2/P/CIR/2025/100, dated 11 July 2025. The Master Circular is the reference point a company should use when reading an ESG rating in 2026.
CRISIL ESG Ratings and Analytics is the first SEBI-registered ERP, granted Category I approval on 25 April 2024. Other registered providers include ICRA, CARE, SES and ESG Risk Assessments and Insights.
An ERP scores or grades a company from its disclosed and public data. The company, working with a consultant, prepares the underlying disclosures; the ERP issues the rating; a separate assurance provider may assure the data. Methodology, and therefore weighting, is set by each provider. Under CRISIL’s published methodology of May 2026, Governance carries the highest weight, at Governance 40, Environmental 35 and Social 25. A rating is provider-specific: there is no universal official ESG score, so a grade from one ERP is read against that provider’s method, not as an absolute number.
The CSRD Omnibus "Stop-the-Clock" timeline for EU-facing companies
The Corporate Sustainability Reporting Directive, formally Directive (EU) 2022/2464, sets the EU’s corporate sustainability reporting regime. In 2025 the EU reset its phase-in. The “Stop-the-Clock” Directive was adopted on 14 April 2025, postponing reporting for the later waves while leaving the first wave in place.
Wave 1, covering large public-interest entities already reporting under the earlier Non-Financial Reporting Directive, is unchanged. Wave 2 is postponed by two years, to financial year 2027, reported in 2028. Wave 3 moves to financial year 2028, reported in 2029.
| Wave | Covers | Reporting status |
|---|---|---|
| Wave 1 | Large public-interest entities already under the NFRD | Unchanged |
| Wave 2 | Other large undertakings | Postponed to financial year 2027, reported in 2028 |
| Wave 3 | Listed small and medium-sized enterprises | Postponed to financial year 2028, reported in 2029 |
For an Indian company supplying an EU customer, the practical effect is a longer runway for the later waves, not a removal of the obligation. Wave 1 entities continue to report on the original schedule.
The Scope 3 disclosure gap, and how companies prepare
The measurable weakness in Indian ESG disclosure sits in value-chain emissions. In the CEEW and IICA report “Advancing Corporate Climate Action through Emissions Disclosures in India”, published in November 2025, of India’s top 1,000 listed companies, 998 filed sustainability reports for FY2024. Within that set, 781 disclosed Scope 1 and Scope 2 emissions, while only 268 reported Scope 3, the value-chain category. Scope 3 is where the gap is largest, and it is the hardest data to assemble because it spans suppliers and downstream use.
Preparation in 2026 therefore centres on evidence: building an emissions inventory that reaches Scope 3, mapping disclosures to the right framework, and readying data for an ERP rating or third-party assurance. GreenSutra works as an ESG consultant and advisor, India-first and Mumbai-based, delivered across India and worldwide. It prepares the evidence base and the disclosures; SEBI-registered ERPs issue ratings and independent third parties provide assurance. Details of that scope of work are set out on the ESG solutions page.
ESG in 2026, answered
Is ESG mandatory in India in 2026?
There is no single "ESG law" in India, and ESG reporting is not mandatory for unlisted companies. The mandatory strand runs through Business Responsibility and Sustainability Reporting (BRSR), the SEBI-defined disclosure for the largest listed companies. Frameworks such as GRI, ISSB and ESRS are voluntary or EU-facing.
Who regulates ESG ratings in India, and who was the first registered provider?
ESG Rating Providers are regulated by SEBI, with the rules consolidated in the Master Circular dated 11 July 2025, reference SEBI/HO/DDHS/DDHS-POD-2/P/CIR/2025/100. CRISIL ESG Ratings and Analytics was the first SEBI-registered ERP, approved on 25 April 2024. Other registered providers include ICRA, CARE, SES and ESG Risk Assessments and Insights.
What did the CSRD "Stop-the-Clock" Directive change?
The Stop-the-Clock Directive, adopted on 14 April 2025, postponed reporting for the later CSRD waves. Wave 1 is unchanged. Wave 2 moves to financial year 2027, reported in 2028, and Wave 3 to financial year 2028, reported in 2029. The obligation is deferred for later waves, not removed.
How large is the Scope 3 disclosure gap among Indian listed companies?
Per the CEEW-IICA report of November 2025, of India's top 1,000 listed companies, 998 filed sustainability reports for FY2024. Of those, 781 disclosed Scope 1 and Scope 2 emissions, but only 268 reported Scope 3 value-chain emissions, and Scope 3 is the widest gap.
Preparing for an ESG rating or a disclosure deadline in 2026? Start with the scope of work on the ESG solutions page, then read the framework detail in the ESG guide. GreenSutra prepares the evidence base; SEBI-registered providers issue ratings and independent third parties assure the data.
Primary sources
- SEBI Master Circular for ESG Rating Providers, SEBI/HO/DDHS/DDHS-POD-2/P/CIR/2025/100, 11 July 2025
- Directive (EU) 2022/2464 (CSRD) and the Stop-the-Clock Directive adopted 14 April 2025, EUR-Lex
- KPMG Survey of Sustainability Reporting 2024
- CEEW and IICA, Advancing Corporate Climate Action through Emissions Disclosures in India, November 2025