Environmental, Social &Governance and Corporate Governance

When a listed company in Mumbai announces its results, three questions sit behind the numbers. Did it make money? Did it make that money without damaging the river, the workers or the neighbourhood? And was it run by people who can be held to account? The first is finance. The second and third are what people now call ESG and corporate governance. Students mix the two up, and the Companies Act 2013 never uses the word ESG at all. So how much of ESG is actually law, and what does the Act require of a well-governed company?

In two minutes

ESG (environmental, social, governance) is a measure of how a company handles its impact on the environment, on people and on its own management; corporate governance is the system of rules and structures by which the Board directs and controls the company, and in the Companies Act 2013 it appears as board composition, directors' duties, committees, vigil mechanism, secretarial audit and disclosure in the Board's report.

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