From boardroom decisions to investor confidence and executive pay, ESG has evolved into a structural pillar of corporate success. With mandatory disclosures, AI-driven monitoring, and rising global scrutiny, businesses must now deliver measurable ESG outcomes—not just promises.
There was a time when Environmental, Social, and Governance (ESG) was more of a compliance concern, closely tied to corporate social responsibility. Today, it shapes capital flows, risk frameworks and business continuity. The shift is not cosmetic but structural. ESG performance today is considered a strategic indicator that dictates corporate success. It reflects how well a company can navigate regulatory shifts, stakeholder expectations and systemic risks, especially those related to climate, resource security and social responsibility.
Deloitte’s 2025 ESG whitepaper, Navigating Global ESG Regulations and Tools, highlights that ESG transformation today is a strategy-to-execution journey that requires clarity of material issues, integrated technology platforms, sector expertise and operational rigour. Furthermore, Deloitte’s 2024 CXO Sustainability Report found that 91 percent of leaders feel confident evaluating ESG profiles and 72 percent have walked away from deals due to ESG red flags—an indication that ESG is now considered as strategic as traditional financial metrics such as Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).
Governments and regulators worldwide are making ESG disclosures mandatory and more detailed, treating them as seriously as financial reporting. For instance, the European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD) mandates companies to report on various data points under a double materiality lens—capturing both financial and impact perspectives. While the EU has simplified some requirements under its 2024 omnibus package, the intent remains clear: ESG disclosures are expected to be structured, more comparable, transparent, and actionable. India’s Business Responsibility and Sustainability Report (BRSR), introduced by SEBI and mandatory for the top 1,000 listed companies, covers key ESG parameters, including emissions, workforce diversity, human rights and governance indicators. This marks a significant step towards standardised and transparent sustainability reporting. These are interconnected frameworks that demonstrate a worldwide consensus on ESG transparency policies.
Global investors are also driving this shift. Over 5,000 institutions have committed to the Principles for Responsible Investment (PRI), signalling a broad-based alignment towards responsible investing. ESG-related risks – from climate exposure to board governance failures – are no longer considered peripheral. Instead, they are seen as financial and reputational liabilities that can impair asset value, trigger regulatory backlash or disrupt operations.
Across sectors, ESG is now directly influencing access to capital. In India, where sectors such as renewables and infrastructure increasingly use sustainability-linked loans and green bonds to fund growth, global institutions also participate through targeted debt instruments under sustainability-linked finance frameworks, signalling rising confidence in companies with credible ESG strategies.
A large Indian cement manufacturer recently secured its second sustainability-linked loan in under six months as part of its business strategy to expand its green cement product line and enhance its decarbonisation push. Meanwhile, an Indian renewable energy developer’s green bond saw investor demand exceed supply eightfold, demonstrating the increasing confidence in companies with transparent ESG agendas. According to a Department of Economic Affairs report, the Indian government raised Sovereign Green Bonds (SGrBs) totalling INR 57,697.398 crore between FY 2022–23 and FY 2024–25. In the Sovereign Green Bonds Allocation Report of FY 2022–23, it was noted that about 78 percent of the proceeds were allocated to clean transportation, about 21 percent to renewable energy and about 1 percent to sustainable management of living natural resources and land use.
In India, several large conglomerates and multinational firms have started linking executive compensation to ESG outcomes. In sectors such as FMCG, leadership pay is increasingly tied to performance on parameters such as water and carbon positivity, plastic neutrality, climate resilience and diversity. A leading Indian automobile manufacturer has linked up to 50 percent of its Managing Director’s performance pay to ESG targets. This trend reflects how ESG is embedded into enterprise architecture, shaping decision-making, procurement and performance monitoring.
Digital platforms, data validation tools and AI-based analytics are increasingly being deployed to monitor ESG performance in real time. This allows businesses to detect gaps early, respond swiftly to stakeholder concerns and ensure regulatory compliance. As expectations around ESG transparency and accountability grow, companies are turning to execution partners who can simplify global frameworks, streamline data flows and embed assurance into every layer of operations.
The stakes for getting this right are real. Recently, a waste-to-energy plant in Gujarat lost funding due to local concerns about pollution and environmental damage. Even though the project had been approved earlier, investors withdrew their support because it did not meet ESG and due diligence expectations.
As the regulatory and commercial landscape becomes more stringent, businesses must move from discussing ESG intentions to executing ESG strategies. The conversation is no longer about whether to integrate ESG, but how to do it in a way that drives resilience, trust and value creation. It is no longer enough to list ESG commitments in annual reports. What matters is whether those commitments lead to measurable and auditable outcomes. Increasingly, ESG is seen as a reflection of operational excellence and board-level oversight.
ESG-aligned technologies, such as green hydrogen, EVs and circular waste models, are influencing policy and business strategies. Governments and multilateral agencies support this trend through incentives, subsidies and policy support. In Delhi, the draft EV Policy 2.0 aims to phase out registrations of new fossil fuel vehicles and promote electric mobility. This policy could significantly reduce air pollution in one of the world’s most polluted capitals while creating strong demand signals for EV businesses. Simultaneously, consumer expectations are shifting, pushing brands to adopt more visible sustainability actions.
In boardrooms and C-suites, conversations about sustainability metrics are becoming as urgent as discussions about revenue growth or profit margins. The coming years will likely witness a complete convergence of sustainability and operational strategy, driven by real-time data intelligence, predictive analytics and AI integration.
In 2025, discussing ESG performance alongside EBITDA is no longer a stretch—it is often expected. ESG has become a crucial lens through which businesses are evaluated, trusted and financed. Companies that understand this shift are embedding ESG into their strategies, not as a feel-good factor, but as a foundational lever for long-term competitiveness.
AUTHOR
Shailesh Tyagi, Partner, Service Line Leader – Sustainability & Climate, Deloitte India