The other day, I visited a government official overseeing the food processing department of a state in India. My goal was straightforward: explore how our sustainability expertise could support a sector with dedicated food parks and some form of state backing. But I walked away with a sobering realisation-selling sustainability in India, especially to mid-sized enterprises, is going to be an uphill battle.

The Big Question: What’s the Driver?

Why should a business invest in sustainability when there’s no immediate regulatory requirement or visible incentive?

Currently, only the top 1,000 listed companies in India are mandated to report on sustainability under SEBI’s Business Responsibility and Sustainability Reporting (BRSR) framework. For others, including the vast mid-market segment, BRSR remains voluntary. While there is talk of expanding the scope and introducing broader regulation, this process is gradual. When new rules do arrive, the scramble for compliance will be intense-much like an unreserved train at an overcrowded Indian railway station. Those who prepare early will have a smoother journey; the rest will be left scrambling for a seat.

Despite the lack of a broad mandate, 73% of Indian mid-market businesses expect to increase their investment in sustainable initiatives over the next 12 months, outpacing the global average of 58%. This shift is driven by factors beyond regulation: 23% cite brand reputation, 16% are responding to supply chain and consumer demands, and 14% are motivated by improved access to finance.

Investing in sustainability today is like booking a reserved ticket-you know your seat is secured, and your journey will be smoother. Early movers are not only future-proofing their operations but positioning themselves as market leaders. Laggards will end up reacting under pressure, with higher transition costs and missed opportunities.

The Real Cost of Waiting

Mindset, Not Mandate and A Call to the Fence-Sitters

Among Indian enterprises, there is a clear intent towards sustainability; however, it is crucial for them to develop sustainability blueprints and roadmaps that are practical and cost-effective to implement. Top leadership often overlooks that building a sustainable business isn’t solely a C-suite objective – it demands a fundamental shift in organisational mindset. Compliance reporting alone won’t create long-term value. True sustainability must be woven into everyday decision-making, from procurement and product design to HR policies and operational strategy.

One thing the government official told me stuck: “Indian companies don’t need more regulations and paperwork-they need less of it.” At Karbonwise, we aim to simplify ESG reporting. But there’s only so much the private sector can do. For real change, the government must act-by streamlining regulatory expectations and providing clarity for mid-market enterprises.

There has been some noise on this from the Indian government. The MSE Green Investment and Financing for Transformation Scheme (MSE-GIFT) and the MSE Scheme for Promotion and Investment in Circular Economy (MSE-SPICE) offer concessional finance, credit guarantees, and capital subsidies to help MSMEs adopt green technologies and circular economy practices. Small Industries Development Bank of India (SIDBI) is the nodal agency supporting these schemes, which are designed to make sustainability accessible and affordable for mid-market businesses.

Learning from the EU: What Not to Do

India should pay close attention to Europe’s early sustainability regulations. The EU’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) introduced highly complex requirements, with companies needing to report on around 500 KPIs and manage over 10,000 data points. For mid-market firms, this created a compliance nightmare-financial managers and HR professionals were left juggling ESG reporting alongside their core duties, resulting in bottlenecks, ballooning costs, and even companies considering exiting high-risk markets or passing costs down the value chain.

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The Omnibus Guide: A Reset

India vs. EU Sustainability Reporting

India’s Opportunity

India has a chance to design a more agile, adaptive regulatory framework-one that enables mid-market enterprises to participate in the sustainability transition without being buried in paperwork. If we get this right, the next two decades could see India’s mid-sized firms emerge as global leaders, rather than reactive followers.

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