With new ESG standards and carbon tracking regulations, companies can no longer rely on superficial environmental claims to boost brand image

For decades, the art of corporate greenwashing has served as a marketing crutch for businesses keen to appear sustainable without committing to real change. Overstating or fabricating environmental responsibility through glossy sustainability reports or vague claims of “carbon neutrality” have often shown that optics are prioritized over impact.

As new ESG standards and carbon-tracking regulations shape the global business landscape, the era of unchecked greenwashing may finally be waning. In its place emerges a new challenge: the transition to true carbon accountability. 

Regulatory Wake-Up Call: The Rise of ESG and Carbon Tracking

Environmental, social, and governance (ESG) frameworks are rapidly becoming the cornerstone of corporate sustainability. Governments and investors are demanding greater transparency and accountability from laws like the European Union’s Corporate Sustainability Reporting Directive (CSRD) to India’s Business Responsibility and Sustainability Reporting (BRSR) framework.

Companies listed on the National Stock Exchange’s top 1,000 are now required to disclose extensive ESG data under the BRSR, exemplifying this shift in India. Carbon trading markets are emerging, and renewable energy commitments are accelerating.

For example, Indian IT giant Infosys has invested heavily in renewable energy to reduce its carbon footprint. Tata Steel has announced ambitious goals to achieve net-zero emissions by 2045. 

Greenwashing: Still Lingering in the Shadows

At face value, these efforts suggest a positive trajectory, but a closer look at the factors that encourage greenwashing draws attention to the complexities and contradictions that plague the journey toward true accountability.

Despite regulatory advancements, ESG standards and carbon-tracking mechanisms often leave room for manipulation.

Take the issue of Scope 3 emissions, which account for the majority of emissions in industries like manufacturing and agriculture. While many Indian companies report reductions in Scope 1 and Scope 2 emissions—those directly within their control—nearly half of corporates omit Scope 3 data tied to supply chains and product lifecycles, with many calling for regulators to do more.

Carbon offsetting also remains a popular but problematic tool of greenwashing. Leading Indian companies claim net-zero status, citing large-scale tree planting and reforestation projects. Satellite imagery reveals degraded land in forest areas earmarked for forestation. Offsets perpetuate the illusion of sustainability however many question the methodology and effectiveness of these carbon credit schemes.

The Consumer’s Role: A Double-Edged Sword

Consumer awareness is both a driver of and a shield for greenwashing. Indian consumers are increasingly aware of the need to use eco-friendly products, but they often lack the information and tools to discern genuine sustainability claims from brand hype and marketing ploys. 

Several companies in India’s FMCG sector were recently flagged for misleading claims of plastic neutrality. Reports from NGOs revealed that most of this recycling occurs in informal waste sectors with no verifiable tracking. 

This consumer education gap allows companies to rely on vague labels like “natural” or “organic” without third-party verification. However, consumer pressure can also fuel change and even the UN Secretary General has recently called for global PR firms to drop fossil fuel clients.

Globally, investigative journalism and watchdogs have exposed high-profile greenwashing scandals, Notable examples include:

• Global fashion giant H&M marketed its Conscious Collection as sustainable, claiming it used eco-friendly materials and processes. However, an investigation by the Norwegian Consumer Authority in 2022 revealed that many claims were vague, unverifiable, or misleading.
• Amazon introduced the Climate Pledge Friendly label to highlight products meeting sustainability standards. However, a 2023 report by Earth.org found that many products with this label relied on vague certifications or lacked clear sustainability metrics.
• In India, a 2022 analysis by the Centre for Science and Environment (CSE) found many of the water harvesting projects were insufficient to replenish the groundwater depleted by bottling operations, exposing the water neutrality claims of global beverage companies operating in India.

Accountability in Action

There are signs that corporate greenwashing is beginning to be under greater and greater scrutiny. In 2023, SEBI cracked down on several companies for misleading ESG disclosures, including exaggerated claims about renewable energy projects. The Indian government’s push for better compliance under the Plastic Waste Management Rules, 2016, has led to increased scrutiny of FMCG giants’ waste recovery programs.

ESG ratings, in particular, have come under fire for their inconsistencies. Some companies are taking proactive steps: Infosys was among the first Indian firms to publish a comprehensive carbon tracking report, going beyond mandatory requirements. 

A critical shift is beginning to take place: companies are realizing that long-term reputational and financial risks outweigh the short-term gains of greenwashing.

Weak enforcement has always been a factor in India’s ESG implementation. Even with stricter regulations, however, enforcement remains patchy. 

Companies with complex supply chains use this opacity to obscure their true footprint, shielding the tracking of their environmental impact. Medium and small enterprises (MSMEs) in India, which contribute nearly 30% to GDP, struggle with the burdens of sustainability reporting. ESG compliance, particularly in developing economies like India, risks becoming a tick-box exercise to satisfy global buyers, rather than a genuine commitment to sustainability.

Strengthening enforcement and improved regulatory oversight through mechanisms such as real-time monitoring and heavier penalties on false claims, are slowly moving us closer to higher carbon accountability standards.

While the current implementation of ESG in India often provides cover for greenwashing, addressing this issue will require coordinated efforts from regulators, companies, and consumers to close loopholes, enforce standards, and prioritize genuine sustainability over superficial compliance.

From Greenwashing to True Accountability

Greenwashing isn’t just a corporate problem—it reflects a systemic failure to align profitability with accountability. Without the moral and economic imperative driving carbon accountability, it will continue to undermine the global fight against climate change.

While corporate greenwashing is not dead, it is increasingly unsustainable in a world demanding greater accountability. For corporate India, the road to carbon accountability is as challenging as it is going to be necessary. Undoubtedly though, the momentum toward genuine carbon accountability is undeniable.

As India continues its rapid development, it has the opportunity to demonstrate that profitability and sustainability can coexist. The future belongs to businesses that can back their public net-zero and other sustainability claims with measurable, verifiable, and impactful actions.