Greenwashing and Directors' Liability under the Companies Act, 2013: An Analysis of Directors' Duties in ESG Governance

Abstract

Greenwashing is a major concern for corporate governance as firms communicate environmental performance through sustainability reports, ESG disclosures and advertisements. It occurs when a company's environmental claims are false, misleading, exaggerated, vague or insufficiently supported by evidence. This study examines when directors can be held liable for greenwashing under the Companies Act, 2013, with reference to their statutory and fiduciary duties. The study focuses on Section 166 and also examines Sections 134, 149(12), 447 and 448, SEBI's BRSR and BRSR Core framework and the CCPA Guidelines, 2024. It is doctrinal and analytical, with a comparative study of the EU, UK, US and Australia. It finds that Indian law offers several mechanisms against greenwashing, but no comprehensive framework determines when it leads to personal director liability, and recommends stronger board-level ESG oversight, verification of sustainability information and better regulatory coordination.