Tue Aug 05 10:56:33 UTC 2025: **News Article:**

**Parliamentary Panel Urges Dedicated ESG Oversight Body to Combat Greenwashing in India**

**New Delhi, August 5, 2025 (The Hindu)** – A parliamentary panel is urging the Ministry of Corporate Affairs to establish a dedicated ESG (Environmental, Social, and Governance) oversight body to actively combat greenwashing and implement penal provisions for fraudulent ESG claims.

The Standing Committee on Finance, in its report tabled in Parliament on Monday (August 4, 2025), expressed concern over the ministry’s current reliance on a disclosure-based regime, arguing it is insufficient to address the growing issue of companies making misleading or unsubstantiated claims about the environmental friendliness of their products or services (greenwashing).

The panel recommended the creation of a specialized body equipped with forensic expertise to monitor ESG claims and develop sector-specific guidelines, particularly for Micro, Small, and Medium Enterprises (MSMEs). It also stressed the need for swift and deterrent penalties for companies found guilty of fraudulent ESG practices.

The committee believes that statutory amendments to the Companies Act, 2013 are necessary to solidify ESG objectives as core elements of Directors’ fiduciary duties, moving beyond mere disclosure requirements to a fundamental corporate responsibility.

Furthermore, the panel urged the ministry to strengthen its efforts to combat financial crimes at their source, enhance the effectiveness of the Serious Fraud Investigation Office (SFIO), accelerate hiring at the National Financial Reporting Authority (NFRA), and establish a more transparent and result-oriented Corporate Social Responsibility (CSR) oversight system. This comes as companies that meet certain profitability benchmarks are required to allocate at least 2% of their three-year average annual net profit towards CSR activities.

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