National Guidelines on Responsible Business Conduct (NGRBC)

The National Guidelines on Responsible Business Conduct (NGRBC) provide a framework for businesses in India to conduct their operations in a responsible, ethical and sustainable manner. They were issued by the Ministry of Corporate Affairs (MCA), Government of India, in 2019 as an updated version of the earlier National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs), issued in 2011.

The NGRBC recognise that businesses have responsibilities that extend beyond generating profits. Companies influence employees, consumers, communities, suppliers, investors and the natural environment. Therefore, responsible business conduct requires organisations to consider the economic, social, environmental and governance consequences of their decisions.

The guidelines are aligned with several international frameworks, including the UN Guiding Principles on Business and Human Rights, UN Global Compact Principles, Sustainable Development Goals and the Paris Agreement.

Evolution and Regulatory Significance

The NGRBC represent an important shift from voluntary corporate responsibility towards measurable and reportable responsible business conduct in India. The guidelines were designed to apply broadly to businesses irrespective of their size, ownership, sector or location, including foreign companies operating in India. They also encourage businesses to extend responsible practices across their value chains, including suppliers, vendors, distributors and business partners.

The NGRBC subsequently became the foundation for Business Responsibility and Sustainability Reporting (BRSR). SEBI introduced BRSR to replace the earlier Business Responsibility Report (BRR), with reporting for the top 1,000 listed entities becoming mandatory from FY 2022–23. BRSR requires disclosures against all nine NGRBC principles through essential indicators and leadership indicators, thereby making ESG-related information more quantitative and comparable across companies.

This makes NGRBC particularly significant because it connects responsible business principles with corporate disclosure, ESG performance and investor decision-making.

Nine Principles of NGRBC

The NGRBC are organised around nine fundamental principles:

Principle 1: Ethical, Transparent and Accountable Governance

Businesses should conduct themselves with integrity, transparency and accountability. Organisations are expected to maintain ethical standards and avoid practices such as corruption, bribery, fraud and conflicts of interest.

Principle 2: Safe and Sustainable Goods and Services

Businesses should provide goods and services that are safe for consumers and minimise negative environmental and social impacts throughout their life cycle.

For example, companies can design products that consume less energy, use recyclable materials and generate less waste.

Principle 3: Employee Well-being

Businesses should promote the well-being of employees and workers, including fair wages, safe working conditions, equality, social security and opportunities for development.

Employee well-being extends beyond permanent employees to include contractual, temporary and other categories of workers.

Principle 4: Stakeholder Responsiveness

Businesses should respect and respond to the interests of all stakeholders, particularly vulnerable and marginalised groups.

Stakeholder engagement enables companies to understand social concerns and incorporate them into business decisions.

Principle 5: Human Rights

Businesses should respect and promote human rights throughout their operations and value chains. This includes preventing discrimination, forced labour, child labour and other forms of human-rights violations.

Principle 6: Environmental Protection

Businesses should respect, protect and restore the environment. Organisations are encouraged to improve resource efficiency, reduce emissions, conserve water and energy, manage waste and address climate-related risks.

Principle 7: Responsible Public and Regulatory Policy Engagement

Businesses should engage responsibly with public policy. Their participation in policy discussions should be transparent and aligned with responsible business principles rather than serving narrow interests.

Principle 8: Inclusive Growth and Equitable Development

Businesses should contribute to inclusive growth and equitable development. Their activities should create opportunities for communities, particularly disadvantaged and vulnerable groups.

This principle connects responsible business with poverty reduction, employment generation, skill development and community development.

Principle 9: Responsible Consumer Value

Businesses should engage with consumers responsibly by providing accurate information, protecting consumer interests, ensuring product safety and respecting consumer privacy.

Oversight and Institutional Responsibility for NGRBC

• Ministry of Corporate Affairs (MCA) is the principal authority that issued the NGRBC in 2019 and provides the overall policy framework for responsible business conduct in India.
• Indian Institute of Corporate Affairs (IICA) supports capacity building, research and implementation related to responsible business conduct and business and human rights.
• SEBI is particularly important for listed companies because the NGRBC principles are incorporated into the Business Responsibility and Sustainability Reporting (BRSR) framework.
• Since FY 2022–23, BRSR has been mandatory for the top 1,000 listed entities by market capitalisation, making NGRBC-based disclosure an important part of India's corporate reporting system.
• Stock exchanges and SEBI's regulatory mechanisms support monitoring of mandatory sustainability disclosures, while companies remain responsible for the accuracy and completeness of their reported information. 

Consequences of Non-Compliance with NGRBC and Related Requirements

• NGRBC itself does not prescribe a specific fine or imprisonment for simply failing to follow its nine principles because the guidelines provide a responsible-business framework rather than a standalone penal law.
• However, where NGRBC-related requirements become mandatory through SEBI's BRSR/LODR framework, failure to make required disclosures can result in regulatory consequences under applicable securities laws.
• Companies covered by BRSR must disclose their performance against the nine NGRBC principles, with essential indicators mandatory and leadership indicators initially voluntary.
• SEBI has strengthened accountability through BRSR Core, which introduced a defined set of ESG performance indicators requiring external assessment/assurance according to the applicable regulatory framework.
• Therefore, the key distinction is that NGRBC principles themselves are not a penal code, but failure to comply with legally mandatory reporting, disclosure or other applicable laws can attract regulatory action.

Impact of NGRBC on Responsible Business in India

• NGRBC has provided India with a common nine-principle framework covering ethics, products, employees, stakeholders, human rights, environment, public policy, inclusive growth and consumers.
• Its principles became the foundation for BRSR, shifting corporate sustainability reporting towards quantitative and standardised ESG disclosures that can be compared across companies and sectors.
• The mandatory BRSR requirement for the top 1,000 listed companies from FY 2022–23 significantly expanded the scale of sustainability reporting among India's listed companies.
• SEBI further strengthened the framework through BRSR Core, with reasonable-assurance requirements initially covering the top 150 listed entities in FY 2023–24 and scheduled to extend to the top 1,000 by FY 2026–27 under the original glide path.
• SEBI reported that more than 1,230 listed entities filed BRSR for FY 2023–24, demonstrating the substantial scale of sustainability disclosure now taking place in India's corporate sector.

References:

Ministry of Corporate Affairs. (2019). National guidelines on responsible business conduct. Government of India. Ministry of Corporate Affairs – NGRBC

Securities and Exchange Board of India. (2021). Business responsibility and sustainability reporting by listed entities (Circular No. SEBI/HO/CFD/CMD-2/P/CIR/2021/562). SEBI – BRSR Circular

Securities and Exchange Board of India. (2023). BRSR Core—Framework for assurance and ESG disclosures for value chain (Circular No. SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122). SEBI – BRSR Core Framework

Global Reporting Initiative. (2021). GRI 1: Foundation 2021. Global Sustainability Standards Board. GRI 1: Foundation 2021