As geopolitical alliances continue to shift, global supply chains are being redrawn. At the same time, sustainability and ESG reporting have moved to the forefront of investor decision-making. With India positioning itself as a global manufacturing hub, the country has a rare opportunity to attract significant manufacturing investment. But ambition comes with increased scrutiny. Sustainability washing is no longer just a public relations issue but it is now a material risk for investors. There is a growing regulatory attention and litigation risk along with loss of reputation.

Why Sustainability Washing Matters to Investors

The term Sustainability Washing refers to misleading, exaggerated, or selective sustainability claims that create an inflated impression of environmental or social responsibility. These claims can be emissions reductions, renewable energy use, water use and waste collection or net-zero commitments but these are not supported by verifiable data or credible transition plan

Today, investors use ESG disclosures as a real input into their decisions, not just as feel-good statements. ESG information now directly affects how companies are valued, where capital flows, the cost of capital, and how long-term risks are judged. When sustainability claims are vague or misleading, risks are not priced correctly. The investors can be caught off guard and often happens when regulators step in triggering investigations and legal action.

Disinformation, Misinformation, and Legal Exposure

From a legal perspective, sustainability washing typically arises in two forms.

Disinformation: where companies deliberately make false sustainability claims, delete or omit material facts and their disclosures are bound to mislead investors and consumers. This practice may give them a false narrative but it carries the highest litigation risk. This is violation of securities laws and may lead to actions under fraud, unfair practices and misrepresentation.

Misinformation: relates to a condition or situation arising from vague disclosures, poor ESG data systems, weak internal control and unverified assumptions. This is not necessarily intentional, but still misleading sustainability disclosures can attract regulatory enforcement and shareholder litigation. Under the aegis of modern disclosure regimes, it is defined that intent is not always required to establish liability.

India’s ESG Disclosure Regime and Investor Expectations

India has a well defined framework for sustainability reporting. The SEBI’s Business Responsibility and Sustainability Reporting (BRSR) framework is a platform which gives a legal back ground to the disclosures. For listed companies, ESG disclosures are not voluntary or........

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