Introduction

In today’s accelerated business world, start-ups can no longer treat Environmental, Social and Governance (“ESG”) principles as optional. Whether attracting investors, meeting regulatory compliance, or pursuing ethical business practices, ESG has become a non-negotiable standard.

Yet, implementation of ESG policies poses a challenge, especially for early-stage ventures. Most start-ups operate on tight budgets, with little to no internal legal support, and often struggle to keep up with the constantly evolving regulatory landscape. This is where the Fractional General Counsel (“Fractional GC”) comes in with a strategic legal and ESG implementation approach that embeds compliance into the heart of the business from day one.

The Role of the Fractional GC in ESG Integration

Fractional GCs play a key role in helping start-ups embed sustainability into core business functions. With expertise in law, governance, and risk management, they assess ESG exposure and guide compliance with evolving regulations.[i] Fractional GCs ensure that sustainability is reflected in board decisions, contracts, vendor policies, and risk frameworks. Start-ups benefit from their strategic input without the cost of a full-time legal team.

Beyond legal compliance, fractional GCs help align ESG goals with long-term strategic planning, ensuring readiness for audits, investor scrutiny, and public disclosure. This involvement transforms ESG from a tick-box exercise into an operational pillar, strengthening both ethical practices and operational resilience, driving meaningful progress on sustainability from the ground up.

The ESG Imperative for Start-ups

As sustainability regulations tighten in India, start-ups must prioritise ESG compliance from the outset. However, due to limited resources, it becomes challenging to establish a whole in-house legal team.[ii] Fractional GCs offer a scalable solution by delivering on-demand legal expertise in legal services tailored to the ESG needs of early-stage ventures. They also assist start-ups navigate environmental laws, labour standards, governance policies, and vendor contracts with legal clarity and efficiency.

Fractional GCs also ensure that ESG principles are effectively integrated into the company’s operations and board governance. Their strategic oversight enhances audit readiness, builds investor confidence, and ensures alignment with regulatory obligations-without the overhead associated with a permanent legal hire. For Indian start-ups aiming to stay compliant, credible, and future-ready, this model is both practical and strategic.

With SEBI mandating the Business Responsibility and Sustainability Report[iii](“BRSR”) for listed entities, and foreign laws such as the European Union Corporate Sustainability Due Diligence Directive[iv] (“EU CSDDD”) coming into play for companies with global aspirations, ESG compliance can no longer be optional or aspirational even for start-ups.[v] It is becoming a business necessity.

Incorporating ESG from Inception: Some of the Strategic Advantages for Start-ups

Considering ESG parameters in start-ups and emerging companies, right from the inception, offer several strategic advantages. Impact-driven funding is becoming more accessible as investors channel put their money increasingly into responsible and sustainable projects. Early ESG adoption also enhances brand perception, builds market trust, and signals credibility to stakeholders.

Importantly, it compels management to focus on long-term operational resilience through risk-aware decision-making. Early ESG adoption also provides a stronger footing for tenders and strategic partnerships, where ESG compliance is often a binding factor in evaluation.

Embedding ESG into Legal Infrastructure

In any start-up environment, there is a general tendency to focus on product development and customer acquisition, often placing legal and compliance matters on the back burner. Instead taking early steps towards establishment of ESG-aligned legal infrastructure can lead to avoiding costly and disruptive corrective measures down the line.

Fractional GCs address this gap by embedding legal compliance and ethical governance into the DNA of the start-ups, transforming them from reactive to proactive entities. They design and implement essential internal policies, such as Prevention of Sexual Harassment (“POSH”) frameworks, whistle-blower mechanisms, and codes of conduct, and deliver employment contracts that reflect ESG principles. They also help to build ethical sourcing frameworks and align board governance with global ESG standards. Their contributions lay the foundation of a legally sound, environmentally conscious, and socially responsible brand. This further help mitigate risks and position the company on the road to long-term prosperity.

Compliance Without Complications

This is where the true value of Fractional GCs lies, guiding fledgling companies through the maze of ESG compliances without overwhelming their limited capacity. Fractional GCs interpret and implement frameworks under SEBI’s BRSR, which mandate listed companies in India to report ESG-related initiatives, risks, and performances in a structured manner, promoting transparency and accountability and aligning Indian companies with global sustainability practices.

They also assist start-ups in operationalising international frameworks such as the Organisation for Economic Co-operation and Development’s (“OECD”) Due Diligence Guidance for Responsible Business Conduct, principles under the UN Global Compact, and relevant corporate social responsibility (“CSR”) and governance-related provisions under the provisions of the [Indian] Companies Act, 2013. They operationalise these frameworks into practice and translate them into actionable strategies, ensuring that compliance becomes an integral part of the start-up’s day-to-day operations rather than a reactive last-minute exercise.

ESG-Aligned Legal Infrastructure Matters Now More Than Ever

The regulatory environment is evolving rapidly. SEBI’s mandated BRSR, EU’s CSDDD, and rising ESG expectations from investors have brought heightened scrutiny for start-ups even at an early stage.[vi] Having a legal expert conversant in compliance and ESG is not just helpful-it’s a necessity[vii].

We’re already witnessing the tangible benefits of this shift. A Bengaluru-based food company leveraged its Fractional GC to establish ethical sourcing policies and seek international green funding. Similarly, a Direct-to-Consumer (“D2C”) beauty brand used its own for creating clear-cut policies on POSH and anti-discrimination to build investor confidence. Even founders in tier-2 cities now rely on virtual legal consults and ESG boot camps to stay investment-ready.

Here is the strength of the FGC model: it is lean, scalable, and built for flexibility.  In cases where companies cannot hire anyone on a full-time basis, one can tap into high-level legal expertise tailored to their specific growth stage, whether that involves policy drafting, ESG reporting, vendor agreements, or strategic compliance advisory services.[viii] Therefore, as the company grows, its legal infrastructure evolves accordingly.

Conclusion: An Investment Worth Making for the Future

The Fractional GC model sits at the confluence of strategic compliance, cost-efficiency, and ESG integration. It offers Indian companies a practical, future-ready legal solution that aligns with both investor demands and regulatory obligations.

In today’s climate, where capital, credibility, and compliance increasingly depend on a start-up’s ESG posture, Fractional GC is not just a wise decision- it is essential. Whether it is investor confidence, building resilient operations, or imagining a values-driven brand, Fractional GCs add value to start-ups to lead them further from compliances and into purpose.[ix]

Looking ahead, the ability of start-ups to embed ESG considerations into their core legal architecture will be a key differentiator not just for securing funding, but also for building sustainable and credible businesses. As the regulatory environment grows more complex, the agility offered by a Fractional GC would become indispensable in anticipating compliance obligations. navigating cross-border legal risks and fostering ethical resilience. Rather than viewing legal infrastructure as a back-office cost, founders must now treat it as a strategic lever that protects value, helps build value for aligned capital, and builds long-term legitimacy in an impact-driven economy, building Sustainable Business models.

References:

[i] United Nations Global Compact, The Ten Principles of the UN Global Compact.
[ii] Aarna Law, Fractional General Counsel Services: Transforming Legal Support for Start-ups (2023).
[iii] Securities and Exchange Board of India, SEBI Circular on Business Responsibility and Sustainability Reporting by Listed Entities (SEBI/HO/CFD/CMD-2/P/CIR/2021/562, 10 May 2021).
[iv] Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 [2024] OJ L168/1.
[v] Securities and Exchange Board of India (SEBI), Business Responsibility and Sustainability Reporting by Listed Entities (Circular SEBI/HO/CFD/CMD-2/P/CIR/2021/562, 2021).
[vi] European Commission, Corporate Sustainability Due Diligence Directive (CSDDD) (2023).
[vii] UN Principles for Responsible Investment (PRI), ESG Integration in Private Equity: A Guide for General Partners (2018).
[viii] Organisation for Economic Co-operation and Development (OECD), Due Diligence Guidance for Responsible Business Conduct (2018).
[ix] Ashwini K, ‘The Rise of ESG in India: Legal Implications for Start-ups’ (2022) 8(2) Journal of Law and Business Ethics 113.

Gaurav Gupta is the Founder and Managing Partner at Bridge Counsels & Anuja Ojha is the Founder and Principal Sustainability Consultant at Raya Consulting, bringing over 15 years of experience in retail and fashion sustainability. She has worked with leading brands such as Levi Strauss & Co. and Arvind, and holds an Executive Program credential from IIM Calcutta, an MBA from the FORE School of Management (New Delhi), and certifications from IESE Business School and NOSA | SAMTRAC. Based in Bengaluru, she leads Raya’s work in integrating sustainability into business models through material reviews, stakeholder mapping, benchmarking, and customized training programs.