India has taken significant steps in recent years to codify ESG expectations. As businesses and investors demand verified, credible ESG disclosure, the role of ESG audits has gained importance. Modern ESG audits in India now involve external assurance, regulatory alignment, technical rigour, and a strong digital component. This article outlines key traits, regulatory essentials, and what companies should do to prepare.

Regulatory Landscape

• Business Responsibility and Sustainability Reporting (BRSR) is now mandatory for large listed Indian companies. This shifts the baseline from voluntary ESG disclosures to legal requirement. mondaq.com

• SEBI has introduced norms that allow ESG ratings to be withdrawn if firms don’t meet reporting criteria or if reports are missing. This signals increased accountability. Reuters

• India‘s audit oversight bodies have initiated probes (e.g. into Gensol, IndusInd Bank) for mis-reporting or improper disclosures. Reuters

What Modern ESG Audits Include

• Assurance of data accuracy: Verification of metrics, disclosures, consistency with standards.

• Greenwashing risk assessment: Scrutiny over exaggerated claims or unsubstantiated statements.

• Third-party validation: External auditors, ESG rating agencies, or certification bodies.

• Regulatory alignment: Ensuring audits meet Indian regulations (BRSR, SEBI mandates), global frameworks where applicable.

• Use of technology: Digital tools, AI, machine learning to sample, cross-check data, monitor anomalies.

Challenges for Businesses

• Collecting quality data, especially from suppliers or from environmental sources.

• Meeting frequent changes in regulation and reporting formats.

• Costs associated with rigorous audits, both monetary and in internal resources.

• Ensuring audit findings translate into real change and not just compliance.

Best Practices / Preparation Tips

• Start with high materiality factors: focus on those ESG issues that matter most to stakeholders and risk profile.

• Use pilot audits internally before full external audits.

• Engage third-party experts who understand local regulation and global ESG standards.

• Incorporate digital reporting systems and AI tools to reduce manual error and improve confidence in data.

Why It Matters

• External investors and funds increasingly demand audit assurance before investing.

• Non-compliance or weak ESG assurance risks reputational damage, regulatory penalties, and capital cost increases.

• Strong audits enhance credibility with stakeholders, improve risk management, and demonstrate commitment to sustainability.