Sectoral Variations in ESG Adoption in Indian Corporations: A Quantitative Assessment and Strategic Policy Implications
DOI:
https://doi.org/10.14419/tgwchw49Published
16-08-2025Keywords:
ESG, India, Sectoral Analysis, Kruskal-Wallis Test, Corporate Sustainability, BRSR, Environmental Performance, Social Responsibility, Stakeholder En-gagementAbstract
This study investigates sector-wise disparities in Environmental, Social, and Governance (ESG) adoption among Indian corporates using a dataset of over 2,500 firm-level observations across eleven sectors. Employing the Kruskal-Wallis H-test to address non-normal data distribution, the analysis reveals statistically significant variations in ESG performance. Sectors such as Oil & Mining and Automobiles demonstrate strong ESG integration, driven by regulatory oversight and investor scrutiny, whereas Textiles and Consumer Durables lag considerably. Governance emerges as the most mature pillar across sectors, while Environmental and Social dimensions exhibit uneven development. The findings emphasize the need for sector-specific ESG policies, enhanced regulatory mechanisms, and greater stakeholder engagement, especially among MSMEs. This paper contributes empirical insights for investors, policymakers, and business leaders to foster inclusive ESG integration in India.
References
Banerjee, A., & Prasad, M. (2019). Corporate sustainability disclosure in India: From narrative to normative. Journal of Business Ethics, 154(2), 593–608. https://doi.org/10.1007/s10551-017-3442-5
Charan, A. (2025, July 7). Environmental finance in India and beyond. Amulya Charan Blog. https://www.amulyacharan.com
Chatterji, A., Levine, D. I., & Toffel, M. W. (2021). How Indian firms respond to ESG ratings. Harvard Business Review. https://doi.org/10.2139/ssrn.3890851
Dua, S., & Pratham. (2025). Sustainable investing in India: An analysis of ESG mutual fund performance. Nolegein–Journal of Business Ethics, Ethos & CSR, 8(1), 1–9. https://doi.org/10.4018/NJBEEC.2025.010101
Faruq, A. T. M. O., & Chowdhury, M. A. R. (2025). Financial markets and ESG: How big data is transforming sustainable investing in developing countries. arXiv preprint arXiv:2503.06696. https://doi.org/10.48550/arXiv.2503.06696
Ghosh, A., & Paul, B. (2023). ESG schemes of mutual funds in India. Purvottaran: The Journal of Management Research, 6(1), 19–30. https://doi.org/10.5281/zenodo.8062311
Gupta, A., & Sharma, P. (2023). Decarbonizing Indian electricity grid. arXiv preprint arXiv:2211.05934. https://doi.org/10.48550/arXiv.2211.05934
Ionescu, L., Fărcaş, A., & Andrei, J. V. (2019). ESG factors and firm performance: Evidence from global industries. Sustainability, 11(13), 3549. https://doi.org/10.3390/su11133549
Kaleeswari, K., & Chaudhuri, R. B. (2024). Analyzing the evolving ESG regulations in India: A guide to implementing ESG strategies. Journal of Law and Legal Research & Development, 2(1), 22–33. https://doi.org/10.5281/zenodo.8096121
Kanhaiya, A. (2023). Environmental sustainability in Indian industries: A sectoral analysis. Indian Journal of Environmental Management, 17(4), 211–230. https://doi.org/10.5958/0976-0563.2023.00456.9
Motwani, R., & Gupta, S. (2023). Business responsibility and sustainability reporting (BRSR) in India: A critical appraisal. International Journal of Disclosure and Governance, 20(1), 55–70. https://doi.org/10.1057/s41310-022-00135-7
Mulchandani, K., & Jain, M. (2023). Do institutional investors care about ESG performance? Evidence from India. International Journal of Indian Culture and Business Management, 29(1), 136–149. https://doi.org/10.1504/IJICBM.2023.128302
Nandan, S. P. K., & Sinku, S. (2024). The impact of ESG ratings on firm financial performance and foreign institutional ownership in India: A sys-tematic literature review. ShodhKosh: Journal of Visual and Performing Arts, 5(5), 1334–1345. https://doi.org/10.29121/shodhkosha.v5.i5.2024.357
Narain, A., & Subramaniam, A. (2023). Sectoral ESG transformation in emerging markets: An Indian perspective. Sustainability Studies Quarterly, 12(1), 45–68. https://doi.org/10.2139/ssrn.4379821
Outlook Business & BDO India. (2025). Outlook ESGBharat Survey 2023: Only 33% of corporate India can defuse ESG attack. Outlook Business. https://www.outlookbusiness.com
Rao, A., Dagar, V., Sohag, K., Dagher, L., & Islam, T. I. (2023). Good for the planet, good for the wallet: The ESG impact on financial perfor-mance in India. Finance Research Letters, 56, 103928. https://doi.org/10.1016/j.frl.2023.103928
Reuters. (2025, April 16). India to review ESG disclosures for listed firms, market regulator says. Reuters. https://www.reuters.com/sustainability
Rohilla, A. (2023). Evaluation of performance of selected Indian ESG funds. Sachetas: Journal of Finance and Governance, 5(2), 59–74. https://doi.org/10.5281/zenodo.8034729
Sarkar, S. (2022). Performance evaluation of ESG funds in India. The Management Accountant Journal, 57(4), 20–28. [DOI not available]
Securities and Exchange Board of India. (2021). Business Responsibility and Sustainability Report (BRSR) Framework. https://www.sebi.gov.in/legal/circulars/jul-2021/business-responsibility-and-sustainability-reporting-by-listed-entities_50919.html
Srivastava, R. (2024). Nexus between ESG scores and financial performance: Evidence from the Indian banking sector. Asian Journal of Account-ing Research. https://doi.org/10.1108/AJAR-06-2024-0244
Vishali, M., & MK, M. S. (2024). Emerging paradigms in socially responsible investment: ESG mutual funds in India. Environment and Social Psy-chology, 9(1), 21–39. https://doi.org/10.1016/j.esp.2024.100089
Bandna, Shah, D. M. A., Lekharu, D. A. J., Hussain, I., Parida, P. R. C., & Rehman, D. M. (2025). Assessing the Impact of Mandatory Corporate Social Responsibility Expenditure on Financial Performance: A Study of Selected Indian Banks. International Journal of Accounting and Economics Studies, 12(3), 347–358. https://doi.org/10.14419/g49q7e48