Purpose Meets Profit: Why ESG is a Strategic Advantage for Indian Businesses

Tanvi Kohli, Intern- Research Analysis

In today’s dynamic business environment, Indian companies are navigating more than just market competition. They are operating in a world where stakeholders—customers, investors, employees, and regulators—are all increasingly demanding transparency, ethics, and accountability. In such a scenario, aligning purpose with profit is not just a noble idea; it is fast becoming a business necessity.

This is where ESG—Environmental, Social, and Governance—emerges as a powerful framework. Far from being a checkbox activity or an extension of corporate social responsibility, ESG is now a strategic tool that shapes long-term growth and resilience. Globally, ESG-driven investing has seen massive growth. In India too, the conversation around sustainable and responsible business has moved from the sidelines to the boardroom.

At its core, ESG is about how a company interacts with the world around it—its environmental footprint, its treatment of people, and the strength of its internal governance. These elements, when handled responsibly, lead to stronger stakeholder trust, better risk management, and in many cases, improved financial performance. In other words, ESG is no longer just about doing good—it’s about doing well.

More and more Indian companies are waking up to the reality that international investors now evaluate potential partnerships not only on profitability, but also on how responsible and future-ready a company is. ESG scores are fast becoming a standard part of due diligence, especially for global funds, private equity, and institutional investors. If a business wants to attract global capital, it must demonstrate alignment with these evolving expectations.

But ESG isn’t just an investor conversation. Indian consumers—especially millennials and Gen Z—are increasingly choosing brands that reflect their values. They want to know how products are sourced, whether labour practices are ethical, and how companies give back to society. Brands that communicate their ESG values clearly and honestly are building stronger emotional connections, and ultimately, long-term loyalty.

Adding to this momentum is the regulatory shift. SEBI’s introduction of the Business Responsibility and Sustainability Report (BRSR) has made it mandatory for the top 1,000 listed companies in India to disclose ESG-related performance. This is a clear signal that ESG is not going to remain voluntary. Compliance will become a norm across industries, and those who are not prepared may face financial and reputational risks.

However, the real power of ESG lies beyond compliance. It drives efficiency and innovation. Companies focusing on environmental responsibility often discover cost-saving opportunities through better energy management and waste reduction. Socially responsible practices—such as fair wages, inclusive hiring, and employee well-being—lead to better team performance and retention. Strong governance brings transparency, reduces fraud, and increases investor confidence.

There are already strong examples in the Indian market. Tata Group has embedded sustainability into its core across multiple sectors. Infosys is setting benchmarks with carbon neutrality and inclusive digital skilling programs. Mahindra & Mahindra is innovating in the electric mobility space and investing in rural development. These companies are showing that ESG is not a distraction—it’s a competitive edge.

As India aims for inclusive economic growth, ESG offers a path where businesses can be profitable while making a positive impact on society and the environment. In the long run, companies that align their strategies with ESG principles are better equipped to navigate uncertainty, earn stakeholder trust, and unlock new growth opportunities. ESG-readiness is becoming a mark of leadership, not just responsibility.

The future belongs to businesses that go beyond short-term gains and embrace long-term value creation through responsible, transparent, and sustainable practices. ESG is no longer just an option. For Indian businesses that want to lead, innovate, and thrive—it is the way forward.