India’s regulatory landscape appears poised for another significant shift, this time in the realm of environmental, social, and governance (ESG) reporting. The Ministry of Corporate Affairs published its draft Corporate ESG Rules in July 2025, which—if finalized as expected—would impose mandatory ESG reporting on the top 1,000 listed companies by market capitalization. A key feature, and one already attracting attention among compliance officers and procurement heads alike, is the requirement for detailed supply-chain sustainability disclosure. For many firms, particularly in manufacturing sectors with complex supplier networks, this represents both a challenge and a rather unique opportunity.
The supply chain section of the draft rules goes beyond high-level policy statements or broad commitments. It asks companies to demonstrate how they are mapping, monitoring, and managing sustainability risks at multiple tiers. This, of course, begs several practical questions. How does a company document supplier compliance in a verifiable, standardized way? Where should it draw the line between feasible diligence and administrative overload? And—this is something many firms are now beginning to debate internally—how much can reasonably be asked of smaller suppliers operating on thin margins, in fragmented sectors?
One tool flagged by the regulators themselves is India’s Open Data Platform for Environmental Compliance. While still in its early stages, this government-backed portal aims to provide a central repository of environmental performance data from industrial units across the country. For exporters, enrolling their direct suppliers onto this platform might well serve as an efficient baseline. The logic is fairly straightforward: if a supplier’s emissions, water use, or waste management practices are already recorded in an official database, the buyer can point to that data in its ESG filings without needing to duplicate effort. But adoption so far has been patchy, and there are questions—inevitably—about data completeness and accuracy.
Encouraging suppliers to participate in this open-data initiative requires, frankly, some careful diplomacy. Buyers will need to articulate the commercial rationale—how transparency can open doors to international markets increasingly governed by sustainability standards. At the same time, they’ll need to offer support, perhaps technical or financial, to help smaller firms navigate reporting requirements. It’s a delicate balance: too heavy-handed an approach risks alienating partners, but a purely voluntary model may not deliver the data companies will need for compliance.
For Tier 2 suppliers, particularly those in raw material processing—whether metals, textiles, or chemicals—the path is even less well-trodden. Direct visibility is often limited; companies rely on intermediaries or distributors who themselves may lack robust data. In this context, simple auditing templates can provide a starting point. These templates should aim not for perfection, but for pragmatism. A checklist might include basic metrics: type of raw material sourced, processing methods used, key environmental permits held, documented energy and water consumption, and (where applicable) certifications such as ISO 14001. Ideally, such audits would also flag known risks linked to specific regions or materials—such as groundwater stress in dyeing clusters, or air pollution concerns in certain metal foundries.
That said, no template can substitute for genuine supplier engagement. Companies will need to think carefully about audit frequency, follow-up mechanisms, and, crucially, how to act on findings. What happens when an audit identifies a gap? Is the supplier given time to remedy it? Does the company seek alternative sources? These decisions won’t always be clear-cut. There’s no one-size-fits-all solution here, and firms will need to navigate commercial realities alongside regulatory expectations.
Another point that’s emerging—though not always acknowledged openly—is the data integration challenge. ESG teams, procurement, compliance, and IT will need to work together to ensure that supplier data feeds smoothly into ESG reporting systems. Fragmented, spreadsheet-based tracking won’t suffice. Some firms are exploring dedicated supplier sustainability modules within their existing enterprise systems; others are turning to third-party platforms designed to aggregate and analyze ESG data. There’s no perfect system, of course. Every approach has trade-offs in terms of cost, complexity, and flexibility.
Interestingly, the draft ESG rules stop short of prescribing specific data tools or reporting formats for supply-chain disclosures. This leaves firms with a degree of discretion—but also, perhaps, uncertainty. How detailed is detailed enough? How much verification is required before data can be reported in good faith? And at what point does the cost of data collection outweigh its incremental value for stakeholders? These are questions that companies are, even now, grappling with. There are no simple answers.
What does seem clear is that waiting for perfect clarity from regulators is unlikely to be a viable strategy. Early action—whether in piloting supplier mapping, enrolling vendors on the Open Data Platform, or trialing audit templates—may help firms not only meet reporting requirements when they do materialize, but also identify operational risks that would otherwise remain hidden. There is a growing recognition that supply-chain sustainability isn’t just a compliance exercise; it intersects with business resilience, brand reputation, and market access in ways that are becoming harder to ignore.
Firms that move early, that build supplier relationships grounded in transparency and mutual benefit, may find themselves better equipped to navigate not just India’s ESG rules, but the broader global shift toward accountable supply chains. That, at least, is the emerging consensus in many quarters. Though whether that optimism bears out in practice, of course, will depend on how these early efforts play out over time.