As India advances toward a clean energy future, the integration of Environmental, Social and Governance (ESG) principles with renewable energy development is transforming the way projects are conceived, financed and implemented. With climate change intensifying and global investors increasingly favouring sustainable portfolios, ESG is no longer just a buzzword it has become a strategic imperative.

Understanding ESG in the Renewable Energy Context

In renewable energy, ESG integration goes beyond achieving carbon neutrality; it emphasizes building projects that are socially inclusive, environmentally responsible and governed by robust ethical frameworks.

India has set an ambitious renewable energy target of 500 GW by 2030, as announced at COP26 in Glasgow. As of June 2025, India’s non-fossil fuel capacity reached 242.78 GW (50.08% of total installed capacity, 484.82 GW), achieving the COP26 target of 50% non-fossil capacity five years ahead of schedule.

Environmental Pillar: Green Energy with a Conscience

While renewable energy is inherently aligned with environmental goals, ensuring long-term sustainability requires a lifecycle approach. In the first half of 2025, India added a record 25.1 GW of non-fossil capacity, 69% higher than the same period in 2024. Of this, 14.3 GW came from large-scale solar and 3.2 GW from rooftop solar.

1. Land Use and Biodiversity

Large-scale solar and wind farms often demand vast tracts of land. Projects in states such as Rajasthan and Gujarat have raised concerns about wildlife displacement and ecosystem degradation.

Gujarat’s Kutch Hybrid Renewable Energy Park, currently under development, is planned at 30 GW capacity on ~72,600 hectares, making it the world’s largest renewable energy park.

The critically endangered Great Indian Bustard faces risks from overhead transmission lines near renewable installations. To mitigate such impacts, developers are conducting rigorous Environmental Impact Assessments (EIAs) and implementing strategies such as underground cabling and designated green corridors.

2. Resource Management and Circular Economy

Manufacturing solar panels, batteries, and wind turbines is resource-intensive and generates considerable e-waste. The International Renewable Energy Agency (IRENA) estimates that India could generate up to 1.8 Million Tonnes of solar e-waste by 2050. Addressing this challenge requires investment in recycling infrastructure and the adoption of circular economy practices such as component reuse and cleaner production technologies.

Beyond recycling challenges, renewable integration also depends on innovations in storage and grid infrastructure. The International Energy Agency (IEA) projects that by 2030, renewables will account for over 50% of global electricity generation, with battery storage and smart grids playing a critical role in stabilizing supply and enabling large-scale adoption.

Social Pillar: Powering People Alongside Progress

Renewable energy projects create social benefits but also pose complex challenges.

1. Employment and Skill Development

By 2023, India’s renewable energy sector employed 1.02 Million people, including ~238,000 in grid-connected solar PV (up 18% from 2022) and ~52,200 in wind.

Between 2017-2022, the sector generated over 100,000 direct jobs. With supportive policies, this figure could rise to 1 Million by 2030, according to the Council on Energy, Environment and Water (CEEW). Rooftop solar systems alone offer significant local employment opportunities, though they require investment in technical training programs to ensure a skilled workforce.

At the same time, ensuring a just transition is critical. The shift to renewables is expected to create millions of new jobs globally in solar manufacturing, wind installation, and storage systems, but it will also displace workers in fossil fuel-based industries. Addressing this requires reskilling and transition programs so that affected communities can participate in the clean energy economy.

2. Land Rights and Community Engagement

Land acquisition remains a contentious issue. In states like Madhya Pradesh, communities have resisted renewable projects citing inadequate compensation and disruption to agricultural livelihoods. Increasingly, developers are adopting protocols such as Free, Prior, and Informed Consent (FPIC) to strengthen engagement and build trust with local communities1.

3. Equity and Inclusion

Promoting gender diversity is gaining traction in the sector. Initiatives such as Powering Livelihoods support women entrepreneurs by providing access to solar-powered tools for rural enterprises advancing both social equity and clean energy adoption1.

Government Support for ESG Integration

India’s policy and regulatory environment is steadily reinforcing ESG adoption:

- SEBI’s BRSR (Business Responsibility & Sustainability Reporting): Mandates ESG disclosures for the top-listed companies from FY2023.

- National Green Hydrogen Mission: Prioritizes ESG-aligned production targets and highlights the role of green hydrogen in decarbonizing hard-to-abate sectors such as heavy industry, shipping, and long-haul transport.

- Sovereign Green Bonds: ₹16,000 crore issued in 2023 under ESG frameworks to finance climate-positive projects1.

ESG-Driven Financing Trends

India’s renewable energy sector attracted USD 19.98 Billion in FDI between April 2020 and September 2024.

In 2023 alone, the country drew over USD 12 Billion in renewable energy investments from sustainability-focused funds. Development banks such as the Asian Infrastructure Investment Bank (AIIB) are linking concessional financing to social performance metrics, including gender inclusion reinforcing the role of ESG in shaping financial flows to the sector.

Globally, the ESG investment market is projected to exceed USD 40 Trillion by 2030, underscoring the scale of capital increasingly flowing toward sustainable assets. This positions India to attract a growing share of such finance as its renewable sector expands under strong ESG alignment.

Renewable Energy: A Strategic Lever in ESG

i. In the first half of 2025, fossil-fuel power output fell by 29 TWh year-on-year, while solar increased by 17 TWh and wind by 9 TWh.

ii. Transitioning from fossil fuels to renewables is one of the most effective ESG strategies for reducing corporate carbon footprints.

iii. This shift supports alignment with Paris Agreement targets, as solar, wind, and hydro power generate negligible emissions compared to conventional energy.

iv. For instance, solar panels produce electricity without direct emissions, while wind turbines generate power without combustion.

v. By adopting renewable sources, companies can significantly reduce both direct (Scope 1) and indirect (Scope 2) emissions making sustainability a core part of their energy strategy.

Conclusion
As India accelerates its clean energy transition, the integration of ESG principles is ensuring that growth in renewables is both responsible and inclusive. Beyond reducing carbon emissions, this approach strengthens investor confidence, safeguards ecosystems, empowers communities, and aligns with global sustainability standards. By embedding ESG into renewable energy strategies, India is not only meeting its climate commitments ahead of schedule but also positioning itself as a global leader in sustainable development demonstrating that economic progress and environmental stewardship can advance together.