Introduction

Sustainability has become a key priority for Indian mid-market firms, as they increasingly recognise the importance of integrating Environmental, Social and Governance (ESG) principles into their business strategies. Data from the International Business Report (IBR), Grant Thornton's global survey of mid-market companies, reveals that 73% of Indian mid-market businesses expect to increase their investment in sustainable initiatives over the next 12 months. This figure surpasses the global average of 58% and the 60% reported in the Emerging APAC region.

The IBR research offers valuable insights into where mid-market businesses stand on their sustainability journey. It highlights the factors driving organisations to act, the primary challenges they face and the sustainability areas they plan to prioritise.

In India, brand reputation is the key driver for ESG investment, as it impacts a company’s value and competitive position. Globally, client demands, investor pressure and market competition are the leading forces behind the push for sustainability. The IBR survey reveals that 23% of Indian mid-market firms are investing in ESG initiatives to improve brand reputation. About 16% are driven by supply chain and consumer demands, reflecting the growing enforcement of ESG regulations in major economies. Additionally, 14% of businesses aim to enhance access to finance through their ESG investments.

Renewable energy takes centre stage

Indian mid-market firms are demonstrating a strong commitment to renewable energy, with 53% planning to increase investments in this area—well above the global average of 42%. In comparison, 39% of firms in Emerging APAC and 30% in Developed APAC are focusing on renewable energy.

India’s goal of achieving net-zero carbon emissions by 2070, coupled with its target of sourcing 50% of its electricity from renewables by 2030, aligns with this investment focus. To support these objectives, the Indian government has allocated INR 19,100 crore in the Union Budget 2024 to boost the renewable energy sector. It has also exempted Basic Customs Duty (BCD) on imports of 25 critical minerals essential for key sectors like space, defence, telecommunications and renewable energy.

Beyond renewable energy, Indian businesses are also prioritising the development of new and sustainable products, supply chain reforms, and diversity and inclusion (D&I) initiatives. The survey reveals that:

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“Indian mid-market businesses are increasingly recognising ESG not just as a regulatory requirement, but as a strategic imperative for long-term success. With 73% planning to increase investment in sustainable initiatives over the next 12 months—well above global averages—these firms are prioritising renewable energy, sustainable products and supply chain reforms. Despite challenges around regulatory complexity and resource allocation, this shift reflects a broader understanding that integrating ESG enhances business value, strengthens resilience and positions companies for sustained growth in the global market.”
Dinesh Anand Partner and Leader, ESG & Risk Consulting, Grant Thornton Bharat

Steps towards sustainability

Indian mid-market businesses are outperforming their global and Emerging APAC counterparts in implementing ESG initiatives. The survey findings show that Indian firms have implemented various sustainability measures, including setting up ESG and data-gathering systems, developing a comprehensive ESG strategy and rolling out ESG programmes.

Steps towards sustainability

Looking ahead, 65% of Indian businesses plan to further strengthen their ESG strategies in the coming 12 months, while 63% are setting up systems for ESG evaluation. About 55% are focusing on ESG brand positioning and setting targets like achieving net-zero emissions.

Key concerns for businesses

While Indian mid-market firms are making substantial progress on the ESG front, they face significant concerns around regulatory compliance. A striking 88% of firms cite understanding the requirements for various jurisdictions as a potential barrier to international expansion. Other major concerns include the fast-changing regulatory landscape and the need for adequate resources, both in terms of staff and time.

Barriers to ESG implementation 

The complexity of regulations and standards remains the biggest obstacle for Indian mid-market firms, compounded by national and state-level variations. Cost (capital investment) is another significant barrier, given the substantial funds needed for the deployment of sustainable technologies and infrastructure.

Other challenges include a lack of visibility into corporate value chains and fragmented data, making it difficult for businesses to measure ESG performance and align strategies across departments.

Grant Thornton Bharat simplifies ESG compliance

With our extensive expertise in sustainability reporting and a deep understanding of diverse ESG frameworks, we collaborate closely with organisations to enhance their ESG monitoring, compliance and reporting processes. Our offerings are customised to the unique needs of each industry and encompass ESG diagnostics and due diligence, strategy and roadmap formulation, materiality assessments, and assurance services. Our team of experts also assists in compiling Business Responsibility and Sustainability Reports (BRSR), greenhouse gas (GHG) inventorisation, and conducting capacity-building workshops, all aimed at improving ESG ratings.

Our strategic collaboration with GovEVA, a leading digital ESG SaaS provider, enhances our ability to support your ESG journey. Together, we offer real-time ESG tracking, adherence to global standards (GRI, SASB, BRSR), robust data validation and AI-driven reporting. GovEVA significantly enhances ESG performance and compliance, thereby creating substantial value for all stakeholders.

In addition to working with private enterprises, we provide end-to-end support to government bodies and international organisations, including the United Nations, in developing climate-resilient policies and delivering technical expertise and capacity-building initiatives. Our goal is to drive sustainable transformation and empower organisations to meet evolving ESG requirements with confidence.

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About International Business Report (IBR)

The International Business Report (IBR) is the world’s leading mid-market business survey. Launched in 1992, the IBR provides deep analysis and insight into the views and expectations of around 14,000 business leaders globally on an annual basis. The research runs quarterly, interviewing senior executives within mid-market organisations across 31 economies, from all industry sectors. It examines the economic and commercial issues affecting the growth prospects of companies globally. Questionnaires are translated into local languages and fieldwork is undertaken through a mixed methodology, including online and telephone platforms.