As India races toward net zero, the push for sustainability is no longer just policy-driven but investors, consumers, and global markets are now steering the course

As an Indian, it’s a great feeling to know the country becoming the fourth largest economy in the world, based on projections made by the International Monetary Fund (IMF) for 2025-26 in its World Economic Outlook. The report says that India’s nominal GDP is projected to rise to USD 4,187.017 billion. Of course, projection carries many ifs and buts knowing complexities of these calculations, it certainly makes you think about its impact on the days to come.

Will Per Capita Sustainability Indicators Increase With GDP?
If I reflect on my childhood days, I see many sustainable living habits inculcated in society. Either these habits were part of culture or forced on them due to scarcity of resources. We used to save and reuse everything since waste was not an affordable option. As a country, now, we are on such a crucial point in our sustainable journey, that our ‘today’s choices’ are going to have a huge impact on tomorrow. Economic growth comes with many benefits and many side effects too. Should we continue in reaping benefits of economic growth, or should we try to imbibe our earlier generations living habits while we grow?

Any additional income at individual level or organizational level or country level will lead to additional production of goods or services. Our per capita emissions has always been lower as compared to developed countries, however, it is increasing gradually from 0.9 tco2 per capita in year 2000 to 2.0 per capita in year 2023. Sustainability has emerged as a crucial paradigm for the 21st century, particularly for fast-growing economies like India. As one of the world’s most populous nations and a rapidly industrializing country, India stands at a unique crossroads. It faces the dual challenge of economic development and environmental conservation. Hence the pressing question is: how India embracing sustainability? Is it global pressure, or are market forces and consumer expectations driving this transformation?

I think there is interplay between government mandates and market dynamics in shaping the climate strategies of Indian corporations. It delves into policy frameworks, corporate initiatives, investor influence, and the evolving business case for sustainability—now backed by compelling statistics from 2025.

India’s Climate Commitments
India has pledged to achieve net-zero emissions by 2070, with interim goals such as 500 GW of non-fossil fuel capacity by 2030 and 50 per cent of energy from renewables by 2030. As of January 2025, India’s non-fossil fuel energy capacity reached 217.62 GW, a significant leap toward its 2030 target. These commitments are aptly backed by regulatory Instruments like ‘Perform, Achieve and Trade (PAT) Scheme’, ‘Renewable Purchase Obligations (RPOs)’, ‘Carbon Markets Framework’ and mandatory ESG Disclosures like Sebi’s Business Responsibility and Sustainability Report (BRSR) which is now required for the top 1,000 listed companies, with plans to expand to mid-sized and unlisted firms. The 2025 Union Budget reinforced this direction by expanding green bond issuance, offering tax incentives for ESG-compliant businesses, and increasing funding for the Green Hydrogen Mission.

Market Moves: The Business Case for Climate Action
While regulations provide a framework, many Indian companies are going beyond compliance. The shift is increasingly driven by market dynamics, including investor demands, consumer expectations & global influence. Along with corporations, India’s startup ecosystem is doing phenomenal job by solving environmental problems while creating jobs and economic opportunities.

Investor demands
ESG-focused funds are growing rapidly, with green bonds issued by Indian corporates for large scale projects. Indian companies with strong ESG performance are more likely to attract investment from global and domestic ESG-focused investors. Investors look for companies that are transparent about their ESG goals and progress. This includes regular reporting and communication about sustainability initiatives, leadership taking goals related to ESG etc. Companies that can reduce costs and emissions simultaneously are likely to attract more investment.

ESG mutual funds currently account for less than 1 per cent of the total mutual fund assets under management (AUM) in India. However, However, this share is expected to grow significantly, with projections suggesting ESG-themed investments could reach up to 30 per cent of total investments by 2030.

Consumer Expectations
I was amazed to see educational institutions taking up sustainability as a subject even at primary education level. Indian consumers, especially millennials and Gen Z, are increasingly eco-conscious. Sustainable packaging and eco-friendly products are now mainstream in FMCG and fashion sectors. CSR projects adoption of digital tools has grown up many folds, improving transparency and impact tracking. Consumers are looking for products with natural materials, zero waste or recyclable packaging, green buildings or e-mobility options. Scientific evaluation of each alternative may help us understand their impact on environment, however, consumers still welcome these changes considering longer positive impact.

Brands that offer affordable eco-friendly alternatives are likely to win trust and market share.

Global Influence
Indian economic growth will allow us to play a larger role on global platform and Indian companies will be increasingly part of global supply chains. Multinational corporations are demanding sustainability from regional entities and their suppliers. Sustainability targets being seen as global targets geographical and business entity level barriers are getting melted for a common cause.

In 2025, global ESG regulations are reshaping corporate accountability. The EU enforces Corporate Sustainability Reporting Directive (CSRD) and SFDR, while the US mandates SEC climate disclosures. India requires BRSR for top firms, and countries like the UK, Japan, and Australia align with TCFD. These mandates aim to improve transparency, manage climate risks, and attract sustainable investments. Companies must disclose environmental impacts, governance practices, and social responsibility efforts. This global shift reflects growing investor demand for responsible business practices and a unified approach to sustainability across industries and regions.

Challenges and Roadblocks
Apart from government policies and voluntary efforts of industries, there are many notable examples in social and agricultural sectors who are driving climate change. Sikkim started its organic farming initiative in 2010 and achieved target in just 8 years. It received the UN FAO Future Policy Gold Award for its pioneering organic policy. However, developing country like us faces major sustainability hurdles in driving sustainability agenda. While business lack access to adequate climate finance or green investments, governments faces problems with basic infrastructure like safe drinking water, urban waste mismanagement which affects 90 per cent of cities. High fossil fuel dependence will not allow transition smoothly and limited ESG literacy further hinder progress.

The Future: Convergence of Mandates and Markets
The dichotomy between green mandates and market moves is increasingly blurring. In reality, both forces are converging to create a powerful momentum for climate action. Regulations are setting the baseline and creating a level playing field. Consumer demand, investor expectations, and competitive pressures are pushing companies to go beyond compliance. The most successful companies will be those that integrate sustainability into their core strategy – not as a checkbox, but as a driver of innovation, resilience, and long-term value.

India Inc.’s climate journey is being shaped by a dynamic interplay of regulation and market forces. While government mandates provide the scaffolding, it is the market – through capital, consumers, and competition – that is breathing life into corporate climate action. As India marches toward its net-zero goals, the private sector will play a decisive role. The question is no longer whether to act on climate, but how fast and how far companies are willing to go.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the publication.