Director Accountability for Greenwashing in ESG Reporting: A Corporate Governance Perspective
Environmental, Social and Governance (ESG) reporting has emerged as a significant component of modern corporate disclosure practices. Sustainability narratives increasingly influence investor confidence, regulatory scrutiny, and corporate reputation. Despite this growing importance, legal responses to misleading environmental claims-commonly described as greenwashing-have largely been framed within the domain of consumer protection and advertising regulation. Such an approach overlooks the governance structures through which sustainability disclosures are developed and authorised. This article argues that misleading ESG disclosures should be examined through the lens of directors’ fiduciary duties. Sustainability reports are frequently reviewed and approved at the board level, and inaccurate environmental representations may expose corporations to regulatory penalties, investor litigation, and reputational damage. In such circumstances, the duties of care, good faith, and loyalty owed by directors assume particular relevance. Drawing upon Indian corporate law provisions, judicial precedents, and emerging sustainability reporting frameworks, this article demonstrates that current enforcement approaches inadequately connect ESG disclosures with board-level oversight. Strengthening the fiduciary dimension of sustainability governance is therefore necessary to ensure that corporate environmental commitments move beyond symbolic compliance towards genuine accountability.
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