ICRA ESG: Water, Waste Progress Not Enough To Cut Energy Intensity

India’s textile industry is making steady progress on sustainability, driven by improved ESG governance, stronger water stewardship, and rising waste circularity, according to ICRA ESG Ratings’ latest report, ‘Sustainability Unstitched – Indian Textile Industry’s Green Gauge.’ However, high energy intensity and modest renewable energy adoption continue to challenge the sector’s decarbonisation ambitions.

The study evaluates 19 leading listed textile companies across apparel, yarn & fabric, and integrated segments, tracking performance on water management, waste recycling, governance maturity, and emissions reduction between FY2023 and FY2025.

One of the strongest trends highlighted is water stewardship: 74% of companies adopted Zero Liquid Discharge (ZLD) systems in FY2025, led by the integrated segment, reflecting the sector’s response to rising water withdrawal pressures.

Waste circularity also improved, with waste recycling rates increasing from 77% in FY2023 to 80% in FY2025. While waste generation rose by around 19%, ICRA attributes part of this spike to better disclosure practices.

ESG governance structures are also maturing. In the integrated segment, 57% of companies now have dedicated ESG committees, and 71% have set emission-reduction targets, while apparel and yarn/fabric players are catching up. ICRA notes that robust governance is becoming essential for global competitiveness as international buyers tighten sustainability criteria.

Despite these gains, the report flags high energy intensity, especially in the yarn and fabric segments. Renewable energy penetration remains low at 8% of the total energy mix in FY2025, driven mostly by solar and biomass solutions. Scope 3 disclosures also remain limited, with only 21% of companies reporting value-chain emissions.

As global regulations such as the EU Green Deal and CBAM increase scrutiny on carbon-heavy industries, the report urges faster decarbonisation and broader circularity adoption. It highlights the need for investments in technologies including low-liquor dyeing systems, hybrid RO setups, and expanded renewable energy capacity.

Geographic fragmentation of the sector remains a barrier, strengthening the case for cluster-level collaboration and standardised sustainability frameworks.

“The textile sector’s sustainability transition is underway, but the pace must quicken,” said Sheetal Sharad, Chief Ratings Officer, ICRA ESG Ratings Limited. “Advanced technologies, waste-to-value systems and formal ESG governance across all segments are essential for long-term resilience and global competitiveness.”