Indian Boards have made significant progress in placing ESG on their agenda. The harder question (that fewer boards are asking) is whether they understand it well enough to govern it.
ESG has moved from the margins to the mainstream of corporate governance. Yet, despite its prominence in boardroom discussions, many organisations continue to grapple with a fundamental challenge: translating ESG from a reporting framework into a business strategy that creates lasting value.
- What the organisation’s three most material ESG risks are,
- Why those particular risks were prioritised, and,
- How they have influenced the last significant strategic or capital decision – and the answers will vary considerably.
Some will be specific, grounded, and confident. Many will not. This reveals a critical ESG blind spot in many Indian organisations. While sustainability teams are building strong execution capabilities, boards are still evolving from being informed about ESG to truly owning it. As regulatory expectations, investor scrutiny, and stakeholder demands continue to rise, the challenge is no longer intent but governance, embedding ESG into boardroom literacy, decision-making, accountability, and long-term strategy.
How ESG arrived in the boardroom – and why that matters
ESG entered Indian boardrooms through the compliance door, driven largely by the BRSR framework. As a result, responsibility often rested with the CFO’s office, company secretary, or sustainability teams, while boards primarily reviewed and approved disclosures. Governance structures mirrored this approach, positioning ESG as an oversight function under risk, CSR, or dedicated ESG committees. That model is no longer sufficient. Today, independently assessed disclosures, heightened investor scrutiny, global reporting requirements, supply chain expectations, and stricter regulatory oversight have transformed ESG into a strategic business imperative. Boards are now expected to govern ESG as a driver of long-term value and resilience—yet many governance frameworks have not evolved to match this expanded responsibility.
Oversight and ownership are not the same thing
The distinction between oversight and ownership is subtle, but critical.
Oversight is about receiving information and assessing whether it appears reasonable. Ownership goes further: it requires boards to challenge ESG assumptions independently, connect them to business strategy and enterprise risk, and remain accountable for the outcomes. In other words, ESG must be governed with the same discipline as financial performance.
This shift demands more than periodic updates. It requires boards to ask sharper questions, test management’s assumptions, and ensure ESG considerations influence strategic decisions, capital allocation, risk management, and long-term value creation. For many Indian boards, three capabilities remain works in progress:
- Board-level ESG literacy: Directors need sufficient understanding of material ESG issues to challenge management and make informed decisions, not merely endorse disclosures.
- Integration into governance: ESG should be embedded across strategy, risk, investment, and succession discussions—not confined to a standalone sustainability agenda.
- Clear accountability: Board ownership must cascade into management through defined KPIs, performance evaluation, and increasingly, executive remuneration. Without accountability, ESG remains an aspiration rather than a business priority.
As ESG evolves from a reporting requirement to a strategic imperative, boards must evolve with it. The question is no longer whether they oversee ESG, but whether they truly own it.
The remuneration question India is not yet asking loudly enough
Globally, linking ESG performance to executive remuneration has become a hallmark of credible governance. Across the UK, Europe, and several Asian markets, institutional investors increasingly expect a measurable portion of long-term incentives to be tied to independently verified ESG outcomes and not self-reported commitments. Remuneration committees are being asked to demonstrate a clear connection between executive pay and ESG performance.
However, India is still at an early stage. ESG-linked remuneration remains largely voluntary, qualitative, and often disconnected from the independently assessed metrics emerging through BRSR Core. But this is unlikely to remain so. As assessment data matures and investors begin using it more systematically in engagement and voting decisions, boards will face increasing pressure to show that ESG performance carries tangible executive accountability.
Boards that begin embedding this link today are not only future-proofing their governance; they are also sending a powerful signal across the organisation. When ESG outcomes influence executive performance conversations, the quality of data, process discipline, and execution improves significantly.
This shift also changes what management must bring to the boardroom. ESG reporting can no longer end with an annual BRSR submission. Boards need decision-ready information: timely, evidence-backed, comparable over time, and clearly connected to strategy, enterprise risk, capital allocation, and long-term value creation. Like financial reporting, ESG information must enable challenge, not just compliance.
The organisations making the greatest progress are those that have strengthened this interface between management and the board. The objective is not to turn every director into a sustainability expert, but to equip boards with the information and governance structures needed to exercise meaningful ownership. A useful way to assess board readiness is to ask four questions:
- Do directors share a clear understanding of the organisation’s most material ESG risks, or does that understanding depend on the latest sustainability presentation?
- Are ESG risks evaluated with the same rigour as financial and operational risks, including probability, business impact, mitigation, and time horizon?
- Is every material ESG metric assigned to a clearly accountable owner, with robust processes and evidence to support independent assessment?
- Are ESG outcomes embedded in executive performance evaluation and remuneration, or are they tracked separately without meaningful consequences?
The answers reveal far more than ESG maturity, they reflect governance maturity.
As scrutiny from regulators, investors, customers, and global value chains continues to intensify, ESG will increasingly be judged not by the quality of disclosures alone, but by the quality of board oversight behind them. The organisations that stand out will be those whose boards have evolved from reviewing ESG reports to governing ESG outcomes.
For Indian businesses, the next phase of ESG is not about producing more disclosures. It is about building board capability, embedding accountability, and ensuring ESG is governed with the same discipline as financial performance. Avtar ESG works with boards, leadership teams, and ESG functions across Indian businesses and MNC India operations to close the gap between ESG oversight and ESG ownership through board literacy programmes, governance structure assessments, accountability architecture design, and the full spectrum of ESG advisory, reporting support, and assessment readiness. If your board is ready to move from signing off to genuinely owning the ESG agenda, start the conversation by emailing to bhanukumar@avtarcc.com
