A mid-sized engineering company in India had been exporting components to Europe for almost 8 years. Business was stable, customers were satisfied and the company had all the regular registrations, environmental approvals and quality systems expected from a manufacturing unit.
Then one of its largest overseas buyers sent a sustainability questionnaire.
The buyer wanted information on electricity consumption, fuel use, greenhouse gas emissions, waste generation, water consumption, employee safety, supplier screening, anti-bribery controls and environmental policies.
The management initially thought this would be a simple documentation exercise.
It was not.
Electricity bills were with the accounts department. Diesel consumption was maintained by the factory team. Hazardous waste records were handled by the EHS department. Employee information was with HR. Supplier records were maintained by procurement. Some policies existed, but nobody knew when they had last been reviewed.
The company had information.
What it did not have was an organized ESG system.
This is a common situation for Indian MSMEs, manufacturers and exporters. A business may already be doing many things correctly, but when a customer, investor, listed company or overseas buyer asks for ESG information, management suddenly discovers that the data is scattered across departments.
An ESG gap assessment helps identify these weaknesses before they become a customer, compliance or reporting problem.
Instead of immediately preparing a lengthy sustainability report, the business first asks a more practical question:
Where do we currently stand, what information do we already have and what exactly is missing?
That is the purpose of an ESG Gap Assessment.
An ESG gap assessment is a structured review of a company’s existing Environmental, Social and Governance systems.
It compares the company’s current policies, operational practices, records, data and internal controls against the ESG requirements that the organization wants or needs to meet.
For one company, the requirement may come from a customer.
For another, it may come from a listed company asking suppliers for sustainability data.
An exporter may be dealing with European sustainability expectations or Carbon Border Adjustment Mechanism requirements.
A larger organization may be preparing for BRSR, GRI reporting, EcoVadis or independent ESG assurance.
The purpose of the gap assessment is therefore not simply to give the company a score.
A meaningful ESG gap assessment should answer 5 practical questions:
This turns ESG from a broad sustainability concept into a manageable business project.
There is a misconception that ESG is relevant only for large listed companies.
That is no longer how the market works.
An MSME may not directly fall under a particular listed-company reporting requirement, but it can still become part of the ESG data chain.
For example, a company may supply raw materials, components, packaging, engineering services or finished goods to a listed organization.
That customer may request information from its suppliers relating to:
This means ESG expectations can move from large corporations down to their suppliers.
SEBI’s BRSR framework already applies to the top 1,000 listed entities by market capitalization.
The BRSR Core assessment or assurance framework has also been introduced through a phased approach. The coverage reaches the top 500 listed entities for FY 2025-26 and expands to the top 1,000 listed entities for FY 2026-27.
For MSMEs supplying these businesses, the important issue is not whether the MSME itself is directly required to publish a BRSR report.
The practical issue is whether its customer starts requesting ESG information from the supply chain.
That is why an ESG readiness assessment can be useful even before formal reporting becomes necessary.
Exporters face an additional challenge.
Their ESG requirements may not come from Indian regulations alone.
An overseas buyer may require environmental and social information as part of vendor qualification.
Another buyer may require carbon data.
A European customer may request installation-level emission information.
A multinational company may ask the exporter to complete an ESG or sustainability questionnaire before renewing a supply agreement.
The exporter may therefore face multiple requirements at the same time.
These could include:
An exporter should not treat all these requirements as one generic ESG exercise.
The first step should be identifying exactly what the buyer requires and why.
The European Union Carbon Border Adjustment Mechanism has made carbon data particularly important for exporters in certain carbon-intensive sectors.
The definitive CBAM period started from 1 January 2026.
CBAM currently covers specified goods in sectors such as:
For Indian manufacturers exporting covered products to the European Union, carbon information can become commercially important.
The formal CBAM obligation is primarily handled by the EU importer or authorised CBAM declarant, but the importer often depends on information provided by the manufacturer outside the European Union.
This means an Indian exporter may need to maintain reliable data relating to production and emissions.
A CBAM-focused ESG gap assessment may review whether the company has records for:
This becomes even more important because actual embedded emissions used under the definitive mechanism may require verification under applicable CBAM requirements.
The company therefore needs more than a spreadsheet containing estimated carbon numbers.
It needs a traceable data system.
A detailed assessment should examine the business from several connected angles.
At Green Permits, the assessment can be structured around 7 major ESG areas.
The first question is not “Which ESG report should we prepare?”
The better question is:
Which ESG requirements actually apply to the company?
The requirement may be coming from:
This step is important because companies sometimes spend money collecting information they do not currently need while ignoring data that their customers are actually requesting.
An applicability matrix can prevent this.
Before calculating ESG indicators, the company needs to decide what is included.
Consider a manufacturer with:
If energy data comes from both factories but waste data is collected from only one site, the final disclosure may become misleading.
The assessment therefore identifies:
A defined organizational boundary is the foundation for consistent ESG reporting.
Environmental information usually forms one of the largest parts of an ESG assessment.
The review can examine whether the company maintains reliable records for:
For manufacturers, environmental compliance records should also support sustainability statements.
For example, if a company reports that hazardous waste is being managed responsibly, supporting records may include relevant authorizations, waste registers, manifests and disposal records.
ESG reporting should not exist separately from environmental compliance.
The two should support each other.
Greenhouse gas accounting is becoming one of the most requested ESG data categories.
The company’s first task is usually to understand its emission sources.
These are direct emissions from sources controlled by the company.
Examples may include:
These are indirect emissions associated with purchased energy, particularly electricity.
For many Indian MSMEs, purchased electricity can be one of the easiest datasets to identify because monthly bills are generally already available.
Scope 3 can involve emissions elsewhere in the value chain.
Depending on the business, this may include:
A company should not immediately attempt to calculate every possible Scope 3 category.
First identify which categories are relevant.
Then identify where reliable data exists.
Then create a phased data collection plan.
The “S” in ESG is often treated as an HR topic.
In reality, it can involve HR, EHS, administration, operations and management.
The assessment may examine areas such as:
A key issue is evidence.
A company may say that safety training is conducted regularly.
But if there are no attendance records, training modules or supporting documents, it becomes difficult to demonstrate during an audit or customer assessment.
ESG readiness therefore has 4 different levels:
Policy exists.
Process exists.
Records exist.
Performance can be demonstrated.
A policy document alone does not necessarily mean the company is ESG-ready.
Governance is what makes ESG repeatable.
Without governance, sustainability data is often collected once for a questionnaire and forgotten until the next request arrives.
The assessment should identify who is responsible for ESG internally.
Typical questions include:
Every important ESG KPI should ideally have an internal owner.
Otherwise, data collection becomes dependent on individual employees rather than a formal system.
Every major ESG number should be traceable.
Consider electricity consumption.
The final sustainability disclosure may contain a single annual figure.
Behind that number there should ideally be supporting data such as:
12 monthly bills.
Meter records, where relevant.
Calculation sheet.
Review responsibility.
Reporting boundary.
Similarly, waste data should be linked with the records used to calculate the disclosed quantity.
An ESG number without supporting evidence may become difficult to defend during a customer review, rating assessment or assurance exercise.
One of the most useful outputs of an ESG gap assessment is a responsibility matrix.
It identifies which department owns each dataset.
| ESG Area | Typical Information | Internal Owner | Evidence |
|---|---|---|---|
| Electricity | Monthly electricity consumption | Finance / Plant | Bills and meter records |
| Fuel | Diesel, gas, coal or other fuel | Stores / Production | Purchase records |
| Water | Withdrawal and consumption | EHS / Utility | Meter readings and bills |
| Waste | Waste generated and disposed | EHS | Registers and manifests |
| Employees | Workforce information | HR | HRMS and payroll |
| Safety | Incidents and training | EHS / HR | Incident and training records |
| Suppliers | Vendor information | Procurement | Vendor master and assessments |
| Governance | Policies and approvals | Management | Policies and meeting records |
| GHG | Emissions calculations | ESG / EHS | Calculation workbook |
This simple exercise often reveals the real problem.
The ESG information exists, but 8 or 10 different people own different parts of it.
Nobody owns the complete picture.
A practical assessment can also classify each requirement using a 6-level maturity scale.
The requirement has not been evaluated.
Management understands what needs to be done.
A formal process or policy has been created.
Implementation records are available.
The company has defined responsibility, methodology and periodic review.
The company can demonstrate the requirement with a clear evidence trail.
This gives management a more meaningful picture than simply marking requirements as “Yes” or “No.”
The biggest ESG problems are often not dramatic.
They are operational.
Finance reports purchased electricity.
The factory reports meter consumption.
Both figures may be valid, but the difference must be understood before anything is disclosed.
A company may have an anti-bribery policy, supplier policy or sustainability policy.
The gap appears when nobody can demonstrate how that policy is being implemented.
The sustainability team reports environmental performance.
The regulatory team manages consents, waste authorizations and returns.
Neither team checks whether both sets of information are consistent.
Companies sometimes request huge amounts of supplier data before identifying which Scope 3 categories are relevant.
This creates work without creating clarity.
One sustainability presentation uses 2023 data.
Another uses FY 2024-25.
A customer questionnaire uses calendar-year data.
Without a documented reporting period and baseline approach, comparisons become difficult.
Consider an Indian auto-component manufacturer supplying both an Indian listed company and European customers.
Management receives 2 requests within the same quarter.
The Indian customer wants ESG supplier information.
The European buyer wants carbon-related production data.
The company starts with a gap assessment.
The review finds:
The company does not immediately prepare a 100-page ESG report.
Instead, the first 10 actions are:
This is a more practical approach because reporting starts after the data system is established.
A gap assessment should end with action.
The initial phase focuses on diagnosis.
The company maps facilities, policies, departments, compliance records, ESG requirements and currently available data.
The main deliverable is the ESG Gap Register.
The company starts building controls.
Data owners are assigned.
Templates are created.
Missing policies are prioritized.
GHG data collection begins.
Environmental and social records are organized.
The company tests the system.
Data is reconciled.
Supporting documents are reviewed.
Management reviews major ESG gaps.
A mock customer questionnaire or internal ESG review can be conducted.
The actual timeline will depend on the number of facilities, data availability, ESG framework and complexity of operations.
An MSME or exporter should consider an ESG readiness assessment before:
The earlier the company organizes its ESG information, the easier future reporting usually becomes.
Green Permits supports MSMEs, manufacturers, exporters and corporates in building practical ESG systems instead of treating sustainability as only a reporting exercise.
Our ESG support can include:
The objective is simple.
Understand what is applicable.
Identify what already exists.
Close critical gaps.
Build reliable data.
Prepare the organization for customer, investor, reporting or assurance requirements.
ESG does not have to begin with a complicated sustainability report.
For most MSMEs and exporters, it should begin with a structured gap assessment.
A good ESG Gap Assessment helps management identify whether the company has the right policies, reliable environmental data, carbon information, social records, governance responsibilities and supporting evidence.
It also prevents businesses from spending time on ESG activities that may not yet be relevant.
More importantly, it creates a clear roadmap.
Instead of asking 10 departments for information every time a customer sends a questionnaire, the company builds one ESG data system that can support future requirements.
For exporters, this can strengthen customer readiness.
For manufacturers, it can connect sustainability with environmental compliance.
For MSMEs supplying larger organizations, it can prepare the business for increasing supply-chain ESG expectations.
And for companies planning GHG reporting, CBAM readiness, BRSR support, GRI reporting or ESG assessments, it provides a logical starting point.
The goal is not simply to say that your company follows ESG principles.
The goal is to demonstrate it with consistent data, defined responsibility and evidence that can withstand review.
📞 Need an ESG Gap Assessment for your business?
Green Permits can help you review your current ESG position, identify compliance and reporting gaps and build a practical implementation roadmap for your MSME, manufacturing unit or export business.
Contact Green Permits
Phone: +91 78350 06182
Email: wecare@greenpermits.in
Website: www.greenpermits.in
