In the era of rapid industrial growth, climate urgency, and expanding investor expectations, conversations around corporate governance and sustainability have never been more vital. But despite the loud calls for Environmental, Social, and Governance frameworks, many companies remain entrapped in the cycle of profit maximisation at the cost of people and the planet.
To truly grasp the meaning of sustainability, one must look beyond balance sheets and perhaps even towards a simple, ancient parable: “In a semi-desert region, a bird once sought a safe place to lay her eggs. She found a small pit and laid her eggs; the eggs hatched, and they eventually moved on. A wild boar later stumbled upon the spot and enlarged the same pit for resting. After him came a pack of dogs, lured by the scent of the boar, digging further in pursuit.
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Eventually, rains filled the pit with water, creating a pond. Buffaloes, seeking respite, bathed in it and made it even larger. Finally, a poor farmer saw in it an opportunity, he brought his tools, deepened it, and attempted to farm around it. But just as he began reaping some benefits, the wealthy landowner claimed ownership of the land. A dispute ensued and this leads us to think—who owned the water? Was it the bird? The boar? The dogs? The buffaloes? Or the farmers?”
This story is a profound metaphor for our current development models, where multiple stakeholders interact with natural resources over time. Entrepreneurs, corporations, and governments often stake a claim to profit and revenue, leaving little room to acknowledge the roles played by people, communities, and nature. The planet’s contribution, much like that of the bird or the buffalo, goes unrecognised and unrewarded. In this profit-versus-planet model, sustainability often gets left behind.
Corporate Governance Must Evolve
Corporate governance is not a new concept. Ancient Indian texts like the Mahabharata and Arthashastra laid down foundational ideas of governance, transparency, and ethical leadership. Bhishma, in the Shanti Parva, and Chanakya, through Arthashastra, emphasised the importance of governance. These principles are as relevant in today’s boardrooms as they were in ancient kingdoms.
Shanti Parva from Mahabharata teaches us about the responsibility of a king (leadership) and principles of proper governance, where the King must rule according to Dharma and must not take advantage of his position. He must appoint his officials after proper examinations and rule his kingdom justly and truthfully.
Arthashastra emphasises the importance of ethical leadership, public welfare, and accountability with four pillars of governance i.e., Palana (protection), Vriddhi (development & growth), Raksha (safeguarding interests), and Yogakshema (social security). The Arthashastra stresses that the king (corporate leaders) should be seen as the servants of the people, prioritising their well-being. The Arthashastra also emphasises the importance of morality and ethical conduct in leadership, the importance of public welfare, including the well-being of citizens and accountability at all levels of governance, including the king and his officials.
The Rig Veda, a foundational text of early Vedic society, reveals a governance structure characterised by a tribal chief (Rajan) supported by assemblies like the Sabha and Samiti. While the Rajan held a position of leadership, the assemblies played a significant role in deliberation and decision-making, suggesting early democratic influences. The Rig Veda also mentions the Purohit (priest) who advised the king on matters of governance. Atri Smriti in the Veda teaches us that the king must follow five yajans or selfless duties – and these are – to penalise the evil, award the good, augment the treasury by honourable means, be neutral toward the plaintiffs, and protect the kingdom.
The concept of governance in the Ramayana, particularly through the reign of Rama, emphasises upholding righteousness (Dharma) and prioritising the welfare of the people. This ideal governance, often referred to as “Ramrajya,” is characterised by ethical leadership, justice, and the well-being of all citizens.
Bhagavad Gita also emphasises the importance of upholding Dharma and always perform one’s duty correctly without the expectations of what one might gain from it.
Corporate Governance in modern-day India is a set of internal controls, policy, and procedures that form the framework of a company’s operations and its dealings with various stakeholders such as customers, management, employees, government, and industry bodies. Corporate Governance is the soul of an organisation and must be adhered to while indulging in any business practices.
The corporate governance framework in India is primarily governed by the Companies Act 2013, which mandates the establishment of a board of directors, audit committees, and other mechanisms to ensure transparency and accountability. Additionally, the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI), the authorities overseeing corporate governance initiatives in India, have issued regulations and guidelines such as the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which impose specific requirements on listed companies to enhance governance practices.
Business Responsibility and Sustainability Reporting (BRSR) was introduced by the SEBI in 2021 to mandate certain listed companies to disclose their Environmental, Social, and Governance (ESG) performance. The Business Responsibility and Sustainability Reporting (BRSR) framework in India evolved from the earlier Business Responsibility Report (BRR). In 2012, SEBI mandated BRR for the top 100 listed companies, later expanded to the top 500. In 2021, BRSR replaced BRR, introducing a more comprehensive and standardised approach to ESG reporting.
This evolution reflects a shift towards global alignment with frameworks like GRI, SASB, and the UN SDGs. The goal of BRSR reporting is to improve transparency, encourage responsible business practices, and ensure investors have access to standardised ESG disclosures. BRSR is a significant step towards promoting sustainable business practices and increasing transparency in the Indian capital market.
However, it is pertinent that modern corporate governance must move beyond box-checking exercises and cosmetic compliance. Regulators like SEBI and frameworks like the Business Responsibility and Sustainability Reporting (BRSR) have provided clear guidance, but true change cannot be legislated, it must be internalised. It is ultimately the responsibility of individual business leaders to uphold governance and ethics, not because regulators demand it, but because it is the right thing to do. We must understand that a company is not all about just profits, market valuations, and turnovers and that there is a lot that goes into building its position and image. Corporate Governance is one such hidden force.
Ethical Leadership: A Timeless Imperative
To illustrate the timelessness of ethical conduct, consider the story of General K. M Cariappa. During the 1965 India-Pakistan war, his son, an Indian Air Force officer, was captured after his plane was shot down. Pakistani General Ayub Khan, having known the family from pre-independence days, offered to release the captured pilot as a personal favour. But General Cariappa, now retired, declined the offer, saying, “He is not my son. He is the son of India. Any facility you wish to offer him should be extended to all, or to none”.
This is what integrity looks like, living by principles even when no one is watching, and especially when personal stakes are high. Such integrity is the cornerstone of effective corporate governance.
From Regulation to Responsibility
While regulatory structures are essential, they cannot replace moral clarity. Governance must not be reactive, where companies act only when the regulator points out lapses. It must be proactive, where leaders must address issues before they escalate into scandals or crises. As seen in numerous corporate failures and banking irregularities, ignoring early signs of ethical erosion can lead to systemic breakdowns. A company that has good corporate governance experiences a much higher level of confidence amongst the shareholders associated with that company. Corporate governance safeguards not only the management but also fosters the economic progress of the nation.
It is also important to recognise that governance is not limited to protecting investor interests alone. In today’s interconnected world, minority shareholders, local communities, future generations, and even ecosystems are stakeholders. True corporate responsibility means balancing the interests of all these groups. There is a direct relationship between governance, risk mitigation, and compliance. A strict, consistent, and responsible adherence to the policies and the law ensures that the company is braced well for any uncertainty and thus has risk mitigation mechanisms in place.
If India wishes to strengthen its corporate reputation globally and foster inclusive, resilient growth, then corporate governance must embrace its ethical roots. Corporate governance is vital for ensuring the long-term sustainability and success of companies in India. As businesses grow and profitability rises, it is imperative to ensure that growth is not achieved at the cost of environmental degradation or social exclusion.
Sustainability is not just a side conversation, but it is central to the long-term survival of any enterprise. And good corporate governance is not merely about adherence to regulations, but it is about character, foresight, and accountability. As the story of the growing pit shows that every stakeholder plays a part, but without clarity, collaboration, and fairness, even a life-giving pond can become a point of conflict.
To echo the wisdom of our past and the urgency of our present: corporate governance is not just about rules, it is about responsibility.
The author is Executive Incharge, Ferro Alloys and Minerals Division, Tata Steel Ltd. The views expressed in this article are of the author and not necessarily those of the company he is associated with.