Rethinking ESG Disclosure and Board Accountability: Multidisciplinary Responses to Greenwashing and Governance Failures in India, the EU, and the UK.

Abstract

Over the past twenty years, Environmental, Social, and Governance (ESG) factors have transitioned from a specialized idea in responsible investing to a standard requirement for companies across the globe. This shift is driven by the idea that if businesses are required to report on their environmental impact, how they treat their workers, and how well they manage their internal systems in a clear and verifiable way, investors and regulators can more effectively support ethical companies and challenge those that do not meet these standards .

However, in practice, the requirement to disclose ESG information has led to a major issue. Greenwashing—the act of presenting an exaggerated or inaccurate image of a company's sustainability efforts—has become more common as regulatory efforts to stop it have expanded. Companies in Europe, Asia, and elsewhere still issue reports that claim they are more environmentally and socially responsible than their actual practices show. The internal systems meant to detect such issues have not kept up.

This paper explores why this is happening. By comparing ESG regulations in India (Business Responsibility and Sustainability Reporting—BRSR), the European Union (Corporate Sustainability Reporting Directive—CSRD), and the United Kingdom (TCFD-aligned governance codes and the Corporate Governance Code), the paper argues that independent directors—those formally responsible for corporate governance at the top of companies—face significant obstacles in effectively overseeing ESG matters. These challenges include a lack of specialized knowledge about sustainability, reliance on management for key information, limited legal consequences for governance failures, and a common board culture that treats ESG as a compliance task rather than a major accountability issue .

The paper suggests five specific reforms to address these structural challenges: requiring independent directors to have ESG competency, ensuring independent third-party verification of sustainability reports, increasing liability for directors who fail in ESG governance, incorporating important ESG measures into regular financial reporting , and creating dedicated ESG oversight committees at the board level.

The central point is clear but essential: improved ESG reporting alone will not stop greenwashing unless those tasked with overseeing the reporting are properly equipped and motivated to take the responsibility seriously