Regulatory Requirements for ESG Compliance

This chapter traces the global evolution of environmental, social, and governance (ESG) regulations from voluntary principles to mandatory legal frameworks. It examines how investors demand, systemic risk concerns, and international accords, especially the Paris Agreement, have driven convergence towards standardised ESG disclosures. The establishment of the International Sustainability Standards Board and its IFRS S1 and S2 standards marks a pivotal step in creating a global baseline for sustainability and climate reporting. It also reviews emerging national frameworks, such as India’s Business Responsibility and Sustainability Report core, and their implications for resource-constrained micro, small, and medium enterprises (MSMEs). It highlights how technology, proportional regulation, and financial incentives can ease compliance while maintaining credibility through assurance and anti-greenwashing measures. Case illustrations from Asia-Pacific and Sub-Saharan Africa demonstrate practical approaches for MSME integration. The chapter concludes that inclusive, scalable, and technology-driven ESG frameworks are crucial for aligning MSMEs with global sustainability goals, enhancing competitiveness, and supporting a just low-carbon transition.