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Parliamentary Standing Committee on Finance’s key Recommendations on Environmental, Social, and Governance (ESG) | Current Affairs | Vision IAS
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Parliamentary Standing Committee on Finance’s key Recommendations on Environmental, Social, and Governance (ESG)

Posted 05 Aug 2025

2 min read

ESG refers to a set of standards to measure a company’s environmental and social impact. 

Key Observations on ESG

  • Legal Backing: Companies Act, 2013 does not mention ESG explicitly, it is implied through aspects like Energy Conservation, POSH Act, Maternity Benefit, Corporate Social Responsibility (CSR) framework, etc. 
  • Existing Risks: Greenwashing, inconsistent implementation across sectors, and the difficulties faced by small businesses in adopting robust ESG practices. 

Key Recommendations 

  • Dedicated ESG Oversight Body: Under Ministry of Corporate Affairs (MCA) for monitoring disclosures, ensuring compliance, and introducing penalties for greenwashing.
  • Amendment to Companies Act, 2013:  Providing a clear legal basis for integrating ESG into core business strategies.
  • Formulating Sector-Specific Guidelines:  Providing targeted support to Micro, Small, and Medium Enterprises (MSMEs).
  • Independent ESG Committees: Similar to audit committees, to ensure effective implementation and monitoring of ESG strategies.
  • Documentation: Dedicating an ESG chapter in Ministry’s Annual Report from FY 2025-26 onwards.

Other Similar Initiatives

  • Business Responsibility and Sustainability Reporting (BRSR): Mandatory for top 1000 listed companies to make ESG disclosures. 
  • BRSR Core: Introduced by SEBI for monitoring Greenwashing.
  • National Guidelines on Responsible Business Conduct (NGRBCs): Released by MCA. 
  • Corporate Social Responsibility: Section 135 of Companies Act, 2013 makes it mandatory for companies of a certain turnover and profitability to spend 2% of their average net profit for the past 3 years on CSR activities.
  • Tags :
  • ESG
  • BRSR
  • CSR
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