A manufacturing company was preparing to raise capital for a major capacity expansion. Its financial statements were in order, production numbers were growing, and the management expected the transaction to close within 45 days.
During the final review, however, the investor identified several compliance gaps. The Consent to Operate still reflected the company’s earlier production capacity, hazardous waste quantities did not match disposal records, and plastic packaging data reported on the EPR portal differed from the sales figures recorded in GST returns.
The investor placed the transaction on hold.
The company then spent more than 3 months reconstructing records, updating approvals, responding to regulatory queries and renegotiating the conditions of the investment agreement. The issue was not poor financial performance. It was the absence of reliable environmental, social and governance evidence.
An experienced ESG Due Diligence Consultant helps businesses identify such risks before they affect investment, financing, customer onboarding, exports or plant operations.
ESG due diligence is not limited to preparing sustainability policies. It tests whether a company’s claims, licences, data, operating practices and management controls can withstand scrutiny from investors, regulators, lenders, listed customers and international buyers.
ESG due diligence is a structured assessment of a business’s environmental, social and governance risks.
The review examines whether the company complies with applicable laws, maintains reliable records and has controls to manage future ESG obligations. It may be conducted before an acquisition, investment, loan, supplier appointment, export contract, plant expansion or public sustainability disclosure.
A professional review does not stop after confirming that a licence or policy exists. The consultant checks whether the document is valid, whether it covers the actual business activity and whether the operational data matches the information submitted to authorities.
For example, a factory may hold a valid Consent to Operate, but the approved capacity may be 30 tonnes per day while actual production has increased to 50 tonnes per day. Similarly, an importer may have an EPR registration, but one product category or brand may not be included in the approved certificate.
A complete ESG due diligence assessment answers five important questions:
Most companies manage compliance through different departments. The plant team holds pollution-control approvals, the finance department maintains energy bills, HR manages worker records, the procurement team deals with suppliers, and the sales team provides data for EPR returns.
This fragmented structure creates a high risk of inconsistencies.
Electricity consumption reported in a sustainability questionnaire may not match invoices. Waste quantities disclosed in an ESG report may differ from statutory returns. Production capacity may exceed the quantity permitted by the State Pollution Control Board. Supplier declarations may be collected without verification.
An ESG Due Diligence Consultant brings these records into a single assessment framework. The consultant verifies information across departments and identifies gaps that may create financial, legal or reputational exposure.
Businesses commonly require ESG due diligence before:
Due diligence is especially important for manufacturers, importers, recyclers, chemical companies, battery businesses, electronics companies and brand owners because their operations may fall under multiple environmental rules.
India does not have one universal law called the ESG Due Diligence Act. The obligations arise from a combination of environmental laws, SEBI disclosure requirements, labour regulations, governance standards, customer expectations and contractual conditions.
For listed businesses, Business Responsibility and Sustainability Reporting has created a formal structure for reporting ESG information. BRSR Core focuses on a defined set of environmental, social and governance indicators that require stronger data controls and evidence.
Mandatory BRSR Core assessment or assurance applies to the top 500 listed entities for FY 2025-26. The coverage expands to the top 1,000 listed entities for FY 2026-27.
Value-chain ESG reporting also has an indirect impact on smaller businesses. A manufacturer may not be independently required to file BRSR, but a large listed customer may request verified information because the manufacturer forms part of its upstream supply chain.
Under the revised value-chain framework, a business partner individually representing 2% or more of the listed entity’s purchases or sales may fall within the reporting scope. The listed entity may restrict its total reporting coverage to 75% of purchases and sales by value.
This means MSMEs and private companies increasingly need reliable data relating to:
A business that cannot provide this information may face delayed supplier approval, increased audit requirements or loss of a major customer.
| Regulation or Framework | Main Requirement | Applicable Timeline | Applicable Businesses | Principal Risk |
|---|---|---|---|---|
| SEBI BRSR | ESG disclosure in annual reporting | Annual | Top 1,000 listed entities | Disclosure and governance risk |
| BRSR Core | Assessment or assurance of selected ESG indicators | Top 500 in FY 2025-26 and top 1,000 in FY 2026-27 | Listed entities under the glide path | Unsupported ESG data |
| Value-Chain ESG Reporting | Reporting on qualifying suppliers and customers | Voluntary from FY 2025-26 for eligible entities | Listed entities and participating suppliers | Supplier data gaps |
| Environment Protection Act, 1986 | Compliance with environmental rules and directions | Continuous | Industrial and commercial businesses | Monetary penalty and operational action |
| Water Act and Air Act | CTE, CTO and compliance with consent conditions | Before establishment and operation | Manufacturing and processing units | Refusal, suspension or closure action |
| E-Waste Management Rules, 2022 | Registration, EPR targets, returns and certificates | Financial-year based | Electronics producers, manufacturers, recyclers and refurbishers | Portal suspension and EPR liability |
| Plastic Waste Management Rules | EPR registration, packaging data and certificate fulfilment | Financial-year based | Producers, importers and brand owners | Environmental compensation |
| Battery Waste Management Rules, 2022 | Registration, EPR obligations and certificate procurement | Financial-year based | Battery producers, importers and recyclers | Outstanding obligations |
| End-of-Life Vehicles Rules, 2025 | Registration and EPR certificate fulfilment | Effective from 1 April 2025 | Vehicle producers and RVSFs | Certificate and return non-compliance |
The applicable legal register must be prepared separately for every business. A software company, battery importer, chemical plant and plastic recycler will not have the same obligations.
Environmental due diligence is one of the most important parts of the ESG review for an industrial business.
The assessment starts by identifying every operating site, production process, utility, product, raw material, waste stream and pollution-control system. The consultant then maps these activities against the approvals obtained from CPCB, SPCB, PCC and other authorities.
A common mistake is to check only whether a Consent to Operate exists. The consultant must also review its validity, capacity, approved products, fuel, water consumption, effluent quantity, emission sources, hazardous waste limits and special conditions.
A company may have installed new machinery without obtaining an amendment. Another company may be using a different fuel from the one approved in its consent. These differences can become material during investment or lender due diligence.
The environmental review normally includes:
The consultant should compare approved production capacity with installed capacity and actual production. Records for at least 2 to 3 financial years may be reviewed when the assignment involves an acquisition or major investment.
EPR compliance has become a major area of risk for manufacturers, importers and brand owners.
A company may require separate registrations under e-waste, plastic waste, battery waste, tyre waste, used oil or end-of-life vehicle rules depending on its products and business model.
Registration alone does not establish full compliance. The due diligence process must verify whether the correct product categories, brands, quantities and sales data were reported.
For e-waste producers, registration is generally valid for 5 years. Renewal should be initiated 120 days before expiry. Where CPCB raises a deficiency, the producer may be required to respond through the portal within 7 working days.
Quarterly returns must be filed in sequence. Annual return filing also requires the producer to complete the prescribed awareness-related information.
An EPR due diligence review should examine:
Even a small mismatch can affect compliance. For example, if a company imports equipment containing batteries, it may have obligations under the Battery Waste Management Rules even if it does not separately sell batteries.
The Plastic Waste Management Amendment Rules, 2025 introduced additional product-information requirements from 1 July 2025. Producers, importers and brand owners may need to provide prescribed information through a barcode, QR code, product-information brochure or another permitted identification system.
The Battery Waste Management Amendment Rules, 2025 were notified on 24 February 2025. The framework provides options for displaying the EPR registration number through a barcode or QR code on the battery, battery pack, equipment or packaging, subject to prescribed conditions.
The Environment Protection End-of-Life Vehicles Rules, 2025 were notified on 6 January 2025 and became effective from 1 April 2025.
The EPR targets under the ELV framework are:
These percentages are linked to the prescribed quantity of steel used in eligible vehicles. Producers fulfil the obligation by purchasing EPR certificates generated by registered vehicle scrapping facilities.
These targets are relevant only for vehicle producers and applicable entities. They should not be applied to an unrelated industry merely to make an ESG report appear more detailed.
Social due diligence examines how a company manages employees, contract workers, occupational safety, communities and human-rights risks.
A written policy is not sufficient. The assessment must examine whether the policy is supported by attendance registers, wage records, training documents, incident reports, grievance records and site conditions.
Manufacturing facilities often depend heavily on contract labour. The principal employer may still face operational and reputational consequences where contractors fail to maintain wage, safety or social-security records.
The consultant should review at least 12 months of significant social and safety records. For a high-risk factory, a review covering 24 to 36 months may be more appropriate.
The assessment generally covers:
Numerical information should be reconciled. For example, the total number of workers in the factory licence, attendance register and safety training records should not show unexplained differences.
Governance due diligence examines how ESG decisions are approved, monitored and reported.
Many companies collect sustainability data through spreadsheets without clear ownership. One employee enters electricity figures, another estimates waste, and the final report is approved without reconciling the information with statutory records.
This creates a high risk of inaccurate disclosures.
Every material ESG indicator should have:
Governance due diligence also examines board oversight, conflicts of interest, anti-bribery controls, whistleblower mechanisms and supplier screening.
Public claims require particular attention. Statements such as “100% recycled,” “zero waste,” “zero discharge” or “carbon neutral” should not be used unless the company can demonstrate the basis, boundary, calculation method and supporting evidence.
A single-site ESG due diligence assignment generally takes approximately 20 to 35 working days. A multi-site or transaction-level review may require 45 to 60 working days depending on the availability of records and the number of facilities.
| Step | Indicative Timeline | Main Activity | Key Risk |
|---|---|---|---|
| Scope definition | 2-3 working days | Identify sites, products, laws and transaction requirements | Important area excluded |
| Data-room preparation | 5-7 working days | Collect licences, returns, policies and records | Incomplete evidence |
| Regulatory verification | 4-7 working days | Validate approvals and portal information | Invalid approval accepted |
| Site visit | 1-3 days per facility | Review operations and physical controls | Site-level gap missed |
| Data reconciliation | 3-5 working days | Compare production, energy, waste and sales data | Incorrect disclosure |
| Draft report | 5-7 working days | Classify findings and liabilities | Risk remains unquantified |
| Management response | 3-5 working days | Obtain clarification and closure evidence | Finding remains open |
| Final report | 2-3 working days | Issue risk register and action plan | Weak corrective strategy |
The timeline can increase where documents are unavailable, portal returns are pending or multiple historical approvals require reconstruction.
ESG findings become commercially significant when they can interrupt production, delay financing or affect the valuation of a business.
An expired CTO may lead to SPCB action. An unregistered EPR category may create historical obligations. Incorrect waste records may result in environmental compensation. Unsupported claims may expose the company to greenwashing allegations.
Under the amended Environment Protection Act, violations relating to emissions, discharge or handling of hazardous substances may attract monetary penalties. Depending on the provision involved, penalties can range from ₹10,000 to ₹15 lakh.
Certain continuing violations may attract an additional daily penalty. Failure to pay an imposed penalty within the prescribed period can create further legal consequences.
Business risks may include:
The consultant should classify each finding as high, medium or low risk. A missing internal policy is not equivalent to operating a plant beyond its approved capacity.
A manufacturing company increased its production capacity from approximately 30 tonnes per day to 50 tonnes per day after installing an additional production line.
The commercial records reflected the increased output. However, the Consent to Operate still mentioned the earlier capacity. Hazardous waste generation had also increased, while the authorization continued to show the previous quantity.
The issue was identified during an investor-led ESG due diligence review.
The investor classified the matter as a high-risk finding because it affected the legal operating capacity of the plant and the reliability of the environmental data presented by management.
The corrective action plan included:
The transaction was not cancelled. However, the issue changed the closing timeline, documentation requirements and risk allocation between the parties.
This case study demonstrates that ESG due diligence is not intended to stop business transactions. Its purpose is to identify liabilities early enough for the parties to manage them.
A professional ESG due diligence report should provide management with a clear decision-making framework.
The report must explain the applicable requirement, evidence reviewed, gap identified, business consequence, corrective action, responsible department and target closure date.
The expected deliverables normally include:
For investors and buyers, the report may also recommend representations, warranties, indemnities, escrow arrangements and conditions precedent.
An ESG Due Diligence Consultant helps a business determine whether its sustainability claims, regulatory approvals, operating records and management controls are reliable.
The exercise is not limited to listed companies. Manufacturers, importers, brand owners, recyclers, plant owners and MSMEs increasingly face ESG information requests from banks, investors, customers and international buyers.
Early due diligence can identify expired approvals, inaccurate EPR data, unverified supplier information, workforce risks and unsupported environmental claims before they affect a transaction or business relationship.
The cost of conducting a structured assessment is usually lower than the cost of correcting historical compliance failures after an investor, regulator or major customer has identified them.
Policies demonstrate intention. Licences, returns, invoices, monitoring reports, portal records and management controls demonstrate actual compliance.
Businesses that maintain structured documentation, accurate numerical data and clear accountability are better prepared for investment, expansion, BRSR reporting and long-term customer requirements.
📞 +91 78350 06182
📧 wecare@greenpermits.in
👉 Book a Consultation with Green Permits
The consultant reviews environmental approvals, EPR compliance, emissions, waste, worker practices, safety systems, governance controls and ESG data.
There is no single universal ESG due diligence requirement for every company. Obligations may arise through SEBI reporting, environmental laws, investor conditions and customer contracts.
A single-site assessment generally takes 20 to 35 working days. Multi-site and acquisition-level reviews may take 45 to 60 working days.
Yes. Where EPR rules apply, the review should cover registration, approved categories, targets, returns and EPR certificate transactions.
