In response to growing concerns around sustainability and corporate accountability, the Government of India has introduced a new set of environmental and ESG-related compliance requirements that will now extend to registered partnership firms operating in select sectors. This regulatory shift reflects the country’s commitment to global environmental, social, and governance (ESG) standards and its effort to bring unincorporated business entities under the broader sustainability umbrella.

As per notifications issued by the Ministry of Environment, Forest and Climate Change (MoEFCC) and the Ministry of Corporate Affairs (MCA), partnership firms engaged in activities such as manufacturing, mining, construction, food processing, textiles, and waste management will now be required to comply with basic ESG reporting norms, particularly in relation to environmental impact, waste disposal, and energy consumption.

While ESG disclosure rules have long applied to listed companies and large corporations, this marks the first phase of extension to partnership firms, especially those with a turnover above ₹5 crore or employing more than 20 workers. Firms in polluting industries must now obtain and renew Environmental Clearances (ECs) and maintain records of emissions, hazardous waste handling, and water usage in line with the Environment Protection Act, 1986.

Additionally, under the new norms, such firms are encouraged to file voluntary ESG reports outlining their policies on environmental sustainability, worker welfare, and community engagement. Though not yet mandatory for all, these disclosures are being tied to MSME subsidies, credit schemes, and preferential treatment in public procurement.

“ESG compliance is no longer just a corporate concern,” said Ananya Rao, an ESG and environmental law specialist. “Even medium-sized partnership firms must begin building systems for sustainability reporting, especially if they intend to grow, attract funding, or bid for government-linked projects.”

Advisories have been issued through state pollution control boards and industry associations, and awareness programs are being launched to help firms navigate the new requirements. The move is expected to bring greater transparency and environmental accountability to India’s informal and semi-formal business sectors, which have traditionally remained outside the ESG discourse.