Air quality risks, ESG governance and board accountability in India

In-house counsel must elevate air quality risks to a board-level priority, writes Rajiv Malik

There are occasions when the weather remains a benign backdrop, a polite subject of discussion and a mere setting to the rhythms of corporate life. And then come moments when the atmosphere itself becomes a compliance crisis, an operational disruption and, most crucially, a governance imperative. India’s recurring winter smog is no longer a seasonal inconvenience. It has mutated into a structural risk.

Air pollution has become a classic “wicked problem”, multi-causal, scientifically complex and administratively fragmented, yet its consequences for businesses and courts are immediate and material. This year again, the Supreme Court’s sober warnings, calling New Delhi’s air “very, very serious” and urging immediate steps beyond the cosmetic, are a juridical reminder that the quality of the air we breathe is inseparable from the quality of governance we practice.

Environmental, social and governance (ESG) in the business vocabulary was meant to extend corporate responsibility beyond profit logics. Yet air quality, long dismissed as a civic or municipal concern, now stands at the very heart of ESG risk. It is an invisible pollutant with visible consequences: legal, financial, operational, reputational and, above all, ethical.

From nuisance to risk

The evidence is unequivocal. In recent months, New Delhi and North Indian cities once again crossed AQI (air quality index) levels of 450+, triggering stage III and stage IV of the Graded Response Action Plan (GRAP). Newspaper reports indicate that in several pockets, PM2.5 (particulate matter) concentrations surged to nearly 20 times the World Health Organisation safe limit.

The Commission for Air Quality Management’s (CAQM) public bulletins reveal that despite episodic improvements, the underlying drivers, including stubble burning, industrial emissions, construction dust, biomass usage and transport pollution, continue to converge with meteorological inversions to create a toxic cocktail.

Recent analyses by leading consulting and research institutions highlight the deepening business impact of deteriorating air quality in India. A Deloitte assessment notes that nearly 40% of companies in the NCR report measurable productivity losses during severe smog periods, with employee absenteeism rising 8% to 12%, alongside a steady increase in respiratory-related healthcare claims.

Industry surveys further show that poor air quality disrupts logistics, inflates insurance costs and strains business continuity plans. Independent studies by organisations such as the Centre for Research on Energy and Clean Air reinforce that India’s pollution crisis is now a multi-city, multi-sector, multi-quarter phenomenon, not a Delhi-centric anomaly.

For corporates, this translates into clear business impacts:

1. Interruption of logistics when truck movement is halted under the GRAP;
2. Construction bans affecting infrastructure, warehousing and real estate;
3. Manufacturing curbs due to diesel generator-set and emissions restrictions; and
4. Supply chain slowdowns caused by limitations on brick kilns, crushers and peripheral industries.

Air quality today is a cross-enterprise risk, not a social welfare footnote.

Legal architecture

Indian jurisprudence has long treated the right to clean air as intrinsic to article 21 of the Constitution, which refers to the right to life and personal liberty. But the courts’ recent posture has been more assertive than ever. The Supreme Court has not only chastised governments for inertia. It has also emphasised that when AQI reaches hazardous levels, even the functioning of courts must adapt, prompting advisories to shift to virtual hearings. This judicial mood will inevitably influence enforcement.

The statutory framework is broad:

1. Air (Prevention and Control of Pollution) Act, 1981;
2. Environment (Protection) Act, 1986;
3. Commission for Air Quality Management (CAQM) Act, 2021, granting supra-state authority; and
4. The GRAP, now a standing, enforceable protocol.

For corporates, non-compliance is not merely regulatory. It evolves into contractual (inability to perform); labour-linked (occupational safety); and securities-linked (business responsibility and sustainability reporting (BRSR) core disclosures) exposure.

The BRSR core requirements of the Securities and Exchange Board of India demand granular, auditable environmental metrics, and regulators are increasingly cross-verifying sustainability statements. In this evolving landscape, air quality exposure is also a disclosure risk.

Why legal must lead

The assumption that environmental management is a purely technical subject is obsolete. In-house legal teams must lead because:

1. Legal risk is governance risk. Board minutes, risk registers, investor filings and ESG claims require legal stewardship under scrutiny.
2. Regulatory orders trigger contractual consequences. GRAP-led restrictions activate force majeure, customer notice obligations, renegotiations of service-level agreements and delivery recalibrations.
3. ESG claims must withstand scrutiny. Greenwashing litigation is rising globally. Legal must insist on data integrity, third-party assurance, and traceable emission baselines.
4. Employee health is a legal obligation. Hazardous AQI is now an occupational safety concern implicating duty of care, insurance adequacy and statutory compliance.

The in-house legal team is the bridge between atmospheric volatility and corporate resilience.

Strategy through partnerships

Air pollution is too complex for isolated corporate action. Counsel should advise leadership to:

1. Collaborate with local authorities on logistics optimisation during high-AQI periods;
2. Co-develop dust-control infrastructure in industrial clusters;
3. Participate in biomass-management and clean-energy transition initiatives;
4. Engage with independent research organisations (the Centre for Research on Energy and Clean Air, the Centre for Science and Environment, and the Energy and Resources Institute) for credible data and policy advocacy.

These partnerships elevate compliance into stewardship.

National governance mindset

While Delhi-NCR captures headlines, several Indian cities including Kanpur, Lucknow, Nagpur, Vapi, Ranchi and Ludhiana, record hazardous AQI episodes. Pollution does not respect state boundaries, as the Supreme Court has noted.

This requires corporates to adopt:

1. A nationally harmonised governance framework;
2. Standardised contractual and disclosure principles;
3. A pan-India supply-chain map identifying “air-stress zones”; and
4. Portfolio-level risk thinking instead of site-level silos.

Recent analyses, including the Greenpeace 2023 World Air Quality Report and reports by The Hindu newspaper show that India’s air pollution challenge is increasingly regional rather than localised. The 2024 India-Pakistan smog episode demonstrated how meteorology, emissions and agricultural cycles across borders can together create dense pollution episodes that blanket entire geographies.

South Asia accounts for several of the world’s most polluted cities, with PM2.5 concentrations regularly exceeding global safety thresholds by five to 10 times. The World Bank’s assessments further highlight that such episodes impose not only severe public health burdens but also substantial economic losses by depressing productivity and increasing healthcare expenditure.

For in-house counsel, this reinforces that air quality governance cannot be confined to municipal boundaries or state-level directives. It requires a harmonised risk lens that anticipates cross-border disruptions, regional supply chain impacts and co-ordinated regulatory responses across the northern industrial belt.

The crisis sits at the intersection of agriculture, energy, transport and land use policy, areas that evolve slowly, making proactive corporate governance indispensable.

From duty to leadership

In-house counsel can sharpen organisational resilience by driving:

1. Electrified logistics and hybrid or renewable backup power;
2. Supplier training on dust and emissions management;
3. Employee wellness interventions tied to measurable outcomes; and
4. Community-level clean air initiatives that build social capital.

Analyses by Deloitte, PwC and other global firms show that investors reward credible transition pathways, plans grounded in data and not rhetoric.

Conclusion

When the air turns toxic, the corporate mandate must expand beyond compliance. The Supreme Court’s stern message is more than judicial prose. It signals a new era of regulatory vigilance. For in-house counsel, this is a moment to lead, to translate atmospheric volatility into contractual resilience, operational readiness and credible disclosures.

Clean air is a public good. But in a world where environmental risk maps directly to enterprise value, air quality governance is also a competitive virtue. Seasonal firefighting will no longer suffice. Long-term governance, assured data and cross-sector collaboration are now essential. The legal function must therefore rise from being a custodian of compliance to becoming the architect of environmental resilience, practical, principled and profoundly civic.

RAJIV MALIK is the legal leader at LG Electronics India