India has no offence called greenwashing, but it does not follow that greenwashing is unregulated. Misleading environmental claims already engage the disclosure obligations of listed entities, the fraud provisions of securities law and, most significantly, the personal duty of care that Section 166(3) of the Companies Act, 2013, imposes on every director who approves a sustainability disclosure. That exposure exists today, without legislative reform. What is missing is not liability but clarity about who bears it. This article maps that exposure first, tests it against the strongest objection to it, and only then turns to the statutory gaps that remain.

Greenwashing as a Form of Corporate Misrepresentation

Greenwashing includes false carbon-neutrality claims, selective disclosure of ESG data, use of vague environmental terminology such as “eco-friendly” or “net zero”, and sustainability reports that exaggerate actual environmental performance. What matters legally is that these are disclosures, and the law already has principles governing the accuracy of disclosure.

The Supreme Court of India in N. Narayanan v. Adjudicating Officer, SEBI, (2013) 12 SCC 152 supplies the doctrinal foundation for this analysis. The Court upheld a two-year market restraint and a ₹50 lakh penalty under Section 15HA of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) against a whole-time director whose company published inflated financial results, holding that disclosure and transparency are the two pillars on which market integrity rests. The case concerned financial rather than environmental disclosure, but the principle is disclosure-neutral: it attaches to the accuracy of what a listed company tells the market, and there is no reason in principle why sustainability disclosure capable of influencing investment decisions should fall outside it.

Directors’ duties under the Companies Act, 2013 (“CA Act”), are engaged directly. Section 166(2) of the CA Act requires a director to act in good faith to promote the objects of the company and in the best interests of, among others, the community and “for the protection of the environment”. Section 166(3) of the CA Act imposes a distinct duty of due and reasonable care, skill, diligence and independent judgement. The combination is what matters: sub-section (2) names environmental protection among the interests a director must serve, while sub-section (3) supplies the standard against which a board’s verification of environmental claims is measured. A company that uses false environmental branding for commercial advantage is not acting in good faith, and a board that lets it do so has not acted with diligence.

Who Is Exposed Under Existing Law

Three categories of exposure follow from the provisions above, and none of them requires new legislation.

• The director is the most exposed. Section 166(3) of the CA Act is not a disclosure rule but a standard of conduct owed individually, enforceable through an action for breach of duty, the oppression and mismanagement jurisdiction under Sections 241 and 242 of the CA Act, and, for a listed entity, as the factual predicate for regulatory action. A board that approves a net-zero commitment or a carbon-intensity figure without asking how it was derived, who verified it and against what methodology has not exercised due and reasonable care, skill and diligence. Narayanan forecloses the obvious defence: a director cannot disclaim a published statement by pointing to a limited functional portfolio.
• The company faces exposure on two independent tracks. Materially misleading sustainability statements in investor-facing disclosure engage Regulation 4(1)(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”), and, where capable of influencing investment decisions, the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (“PFUTP Regulations”) and Section 15HA of the SEBI Act. The same claim repeated in consumer-facing marketing engages Sections 2(28) and 2(47) of the Consumer Protection Act, 2019 and the guidelines of the Central Consumer Protection Authority (“CCPA”). The tracks operate independently, which means a single carbon-neutrality claim can generate parallel proceedings before two regulators applying different standards to identical words.
• The assurance provider is the third and most overlooked. The provider is appointed by the listed entity itself, need not be a chartered accountant, and must be independent of the company on terms broadly matching those that apply to a statutory auditor. Where the entity opts for assurance, the standard is reasonable assurance: a positive opinion that the reported data is reliable, which is a higher bar than limited assurance and closer to what an auditor gives on financial statements. Since SEBI’s circular of 28 March 2025, an entity may instead obtain an “assessment” against standards developed by the Industry Standards Forum. That choice matters, because a provider who signs a positive reliability opinion on inadequate evidence takes on a risk no Indian case has yet tested and one that is hard to distinguish from an auditor’s.

The Existing Regulatory Framework

 

• SEBI’s BRSR Framework and Green Debt Circular

Regulation 34(2)(f) of the LODR Regulations has required the top 1,000 listed entities by market capitalisation to include the BRSR in their annual report since FY 2022-23, covering emissions, energy, water and waste. SEBI issued Industry Standards on Reporting of BRSR Core, developed by the Industry Standards Forum, by circular dated 20 December 2024. The BRSR Core, introduced by circular dated 12 July 2023, carves out a subset of key performance indicators grouped under nine ESG attributes requiring independent third-party verification, phased from the top 150 entities in FY 2023-24 to the top 1,000 by FY 2026-27. The original standard was reasonable assurance; since SEBI’s circular of 28 March 2025, an entity may choose between “assessment” against Industry Standards Forum standards and assurance.

Value chain disclosure has moved the other way: by circular dated 28 March 2025, SEBI made it voluntary for the top 250 entities from FY 2025-26, with assurance also voluntary from FY 2026-27. Separately, SEBI’s circular on “Dos and Don’ts relating to green debt securities to avoid occurrences of greenwashing” (3 February 2023) is the first Indian instrument to address greenwashing by name, prohibiting misleading labels, selective disclosure and concealment of environmental trade-offs. SEBI has since extended that discipline: the Framework for ESG Debt Securities (other than green debt securities) of 5 June 2025, issued under Regulation 12A of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (“NCS Regulations”), applies comparable anti-mislabelling requirements to social bonds, sustainability bonds and sustainability-linked bonds, and introduces the parallel concept of “purpose-washing”. The regime therefore now covers ESG-labelled debt as a class. It still reaches only issuers of such instruments, however, and the BRSR framework itself does not make greenwashing a prohibited practice at all.

• SEBI (LODR) Regulations, 2015, and the SEBI Act, 1992

Regulation 4(1)(c) of the LODR Regulations requires every listed entity to refrain from misrepresentation and to ensure that the information provided to the recognised stock exchanges and to investors is not misleading. Regulation 4(1)(e) adds that disclosures must be adequate, accurate, explicit and timely, and Regulation 30 requires material events and information to be disclosed to the exchanges within prescribed timelines.

Materially misleading sustainability disclosures capable of influencing investor decisions may attract liability under Sections 11B(1) and 15HA of the SEBI Act, which empower SEBI to issue protective directions and to penalise fraudulent or unfair trade practices. Such disclosures may equally be treated as fraudulent or unfair trade practices under the PFUTP Regulations.

• Consumer Protection Law and Advertising Standards

Under the Consumer Protection Act, 2019, Section 2(28) defines a misleading advertisement to include one that falsely describes a product or service, is likely to mislead as to its nature or quality, or deliberately conceals important information; Section 2(47) defines unfair trade practice to include deceptive methods of promoting goods or services. The CCPA notified the Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims, 2024, on 15 October 2024, the first dedicated anti-greenwashing instrument from an Indian statutory regulator, containing an express prohibition on greenwashing, requiring environmental claims to be specific and substantiated by credible certification or verifiable evidence, and targeting unqualified use of terms such as “eco-friendly”, “green” and “sustainable”. The Guidelines do not prescribe their own consequences for breach; enforcement runs through the CCPA’s existing powers under the Consumer Protection Act, 2019. The Advertising Standards Council of India (“ASCI”), a self-regulatory body, had already issued its Guidelines for Advertisements Making Environmental/Green Claims, effective 15 February 2024, to similar effect. However, these two instruments are limited to claims directed at consumers and do not address ESG disclosures in annual reports or investor communications, which often have the greatest market impact.

Structural Gaps in the Existing Framework

Three structural flaws remain. First, there is no uniform legal definition of greenwashing, and none of the terms carrying the most commercial value, “sustainable”, “net zero”, and “carbon neutral”, has a cross-sectoral legal meaning in India. Companies can therefore use environmental language materially at odds with their performance without contravening any specific provision.

Second, verification is narrow. Mandatory third-party assurance under the BRSR Core reaches only a subset of indicators and a subset of entities; everything else is self-reported and rests on the good faith of the reporting entity.

Third, enforcement is fragmented. SEBI oversees investor-facing disclosure, the CCPA consumer-facing communication, and the Ministry of Corporate Affairs the conduct of directors and annual filings i.e. with no inter-agency coordination mechanism. Where a single claim runs through both investor and consumer channels, which is the common case, no regulator has jurisdiction over the whole of the conduct.

The Forward-Looking Statement Objection

The strongest argument against treating greenwashing as misrepresentation is that most sustainability claims are forward-looking. A commitment to reach net zero by 2050, or to halve water intensity by 2030, is a statement of intention, and intention is not falsified by non-achievement. A regime treating every missed target as a misleading disclosure would deter companies from publishing targets at all, leading to the opposite of what disclosure regulation is for.

The objection has force, but it proves less than it appears. It protects the target; it does not protect the basis on which the target was published. A commitment made with no internal transition plan behind it, or a carbon-intensity figure computed on an undisclosed boundary methodology, is not a forward-looking statement at all but is a present misstatement about the state of the company’s planning and its data. The distinction is familiar from securities law and can be operationalised the same way: a safe harbour for good-faith forward-looking sustainability statements, conditional on disclosure of the assumptions and methodology relied upon, and forfeited where the issuer had no reasonable basis for the statement when it was made. Any statutory definition of greenwashing that omits this carve-out will either chill legitimate target-setting or collapse under its own breadth.

The Case for Targeted Reform

The international trajectory is usually invoked to show that regulation is tightening everywhere and that India is lagging. The evidence no longer supports that reading, and the actual pattern is the more useful one for India. The European Commission’s proposed Green Claims Directive (March 2023) would have required pre-publication substantiation and accredited third-party verification of explicit environmental claims. It has stalled: the Commission announced its intention to withdraw it on 20 June 2025 and the final trilogue was cancelled. It has not, however, been formally withdrawn — the Commission’s 2026 Work Programme of 21 October 2025 still lists the proposal as pending, and the Commission has indicated it would withdraw the file only if micro-enterprises remained in scope. The operative EU instrument is instead the Empowering Consumers for the Green Transition Directive (EU) 2024/825 (“ECGT Directive”), which prohibits generic and unsubstantiated environmental claims and applies from 27 September 2026.

The UK Financial Conduct Authority (“FCA”) has introduced a general anti-greenwashing rule (ESG 4.3.1R) as part of its Sustainability Disclosure Requirements regime (Policy Statement PS23/16, November 2023), in force from 31 May 2024. It requires any reference to a product’s or service’s sustainability characteristics to be consistent with them and to be fair, clear and not misleading. Its significance is its breadth: it binds all FCA-authorised firms, not only managers of labelled sustainable products, and carries the FCA’s ordinary enforcement powers. The FCA has since widened it further, amending the ESG Sourcebook so that “communicates” carries its natural meaning rather than being tied to financial promotions.

Two lessons follow. The first is that the disclosure-mandate approach is losing momentum in precisely the jurisdictions India has been urged to emulate, while conduct rules of general application i.e. the FCA’s anti-greenwashing rule and the ECGT Directive’s prohibitions, are the instruments actually in force. The second is that India should not wait for a greenwashing statute to do work that existing liability rules already do.

Reform is still needed on four fronts, but as reinforcement of a liability architecture that exists rather than as its foundation. First, a single statutory definition of greenwashing should apply across securities, consumer protection and environmental law. SEBI has already taken the first step, carrying the concept across from green bonds to ESG-labelled debt generally in June 2025. The gap that remains is between labelled instruments, where the concept now bites, and ordinary corporate environmental claims, which no definition reaches. Any definition drawn to close that gap should be subject to the forward-looking safe harbour described above. Second, independent verification should extend to all material environmental representations in annual reports and investor communications, not only the BRSR Core indicators. Third, SEBI and the CCPA should create a formal protocol to help eliminate any enforcement gap between them through better coordination of their respective enforcement actions against businesses that fail to comply with their respective laws. Lastly, all directors and senior executives of a publicly traded company should be required to specifically attest that all material ESG information is accurate and no equivalent requirement currently exists for sustainability data, even though Regulation 17(8) read with Part B of Schedule II to the LODR Regulations already requires the CEO and CFO to certify the accuracy of the financial statements.

Conclusion

Greenwashing is not an exaggerated claim; it is a misrepresentation. Its cost falls on the investor who allocates capital on a false premise and on the company that spent real money decarbonising and cannot be told apart from the one that did not.

India has laid down practical foundations for sustainability reporting through the BRSR and BRSR Core frameworks, the CCPA Guidelines 2024, the ASCI green claims guidelines and the Green Debt Circular. But India still lacks a uniform statutory framework governing greenwashing, and boards should not wait for one. The duty of care under Section 166(3), the no-misrepresentation principle in Regulation 4(1)(c) and the fraud provisions of the SEBI Act are in force, and none of them distinguishes between a misstated revenue figure and a misstated emissions figure. The practical implication is narrow and immediate: sustainability disclosure should be put through the same verification and sign-off discipline as financial disclosure, because the standard a regulator or a court will apply to it is the same standard. Whether India’s ESG regime is credible will not be settled by the enactment of a greenwashing statute. It will be settled by whether the first board to publish an unverifiable net-zero claim is treated as having breached a duty it already owed.