Safeguarding Sustainable Investments: Green Audits as the New Baseline for Due Diligence

The ESG and CSR frameworks have been instrumental in guiding companies toward higher sustainability. India, however, remains in the infancy phase of addressing the problem of greenwashing. Green audits are emerging as a critical component of the due diligence process for investors, as they provide an objective assessment of a company’s actual sustainability practices and guard against the pitfalls of greenwashing. For investors, the existence of an independent green audit serves as reliable evidence of a company’s genuine commitment to environmental, social, and governance (ESG) principles, enabling more informed investment decisions and reducing the risk of reputational or financial losses associated with misleading sustainability claims.

Moreover, companies that proactively adopt green audits before such assessments become statutory stand to gain a market advantage by demonstrating transparency, accountability, and adherence to best practices. This foresight helps establish a track record of responsible conduct, reassuring stakeholders of the company’s integrity and preparedness for future regulatory requirements, thereby projecting a clean image and fostering long-term investor confidence.