ESG Assessment Audit of "Axis ESG Equity Fund Regular Growth" & Investment In Amber Enterprises India Ltd & Maruti Suzuki Ltd - A Clear Case Violation of the SEBI And the RBI Guideline.

 BRSR - ESG Audit Assurance Challenge - Research by HR Lab   

* Birendra K Jha                                                                                                                                                                              Practitioner Social Impact Assessment Audit; Practitioner BRSR (SEBI ) Audit- ESG Audit - Sustainability Assurance . EMail: birendrajha03@yahoo.com

This demonstrates why there should be deep Independent Third-Party Impact Assessment  Audit of ESG Fund. If Audit Firm is poor it shall bypass ESG Fund violation. The Auditor role is to ensure honestly ESG investment is going on in its right direction. A word is used in the SEBI (NCS) Regulations 2021, regarding the  ESG Fund that it should must be under "continuous post-listing obligations". 

The SEBI (NCS) Regulations 2021, under Regulation 2 (OA) has inserted concept of ESG Debt security. This is green debt securities, social bonds, sustainability bonds, sustainability-linked bonds, or any other type of bonds, by whatever name called. Again in Regulation 2 Q  "Green debt security" has been defined meeting specified industry standard. The initial disclosure requirements, is continuous post-listing obligations and appointment of Independent Third-Party Impact Assessment Auditor to review  and certify correct use of social bonds. In case any such misuse instances come to light regarding the social bonds/ sustainability bonds already issued. It shall  disclose the same to the investors and undertake early redemption of such debt securities. The RBI Guideline RBI/2023-24/14 Clause 7 prohibits funding of any projects involving new or existing extraction, production and distribution based on fossil fuels or its products. Like SEBI, the RBI Guideline in Clause 8 also mandates the Third-Party  Impact Assessment Audit of funds to curb ESG Investment violation.  

The purpose behind mandatory Impact Assessment Audit of ESG Mutual Fund, in the SEBI and RBI Guideline is to prevent "Greenwashing" and stop fraudulent route of  of ESG Fund in other polluting industries, that are giving high return.  In Europe, This is true half of the 'sustainable' funds are invested in fraudulent ways  in  high return polluting industries  using fossil fuel based products  or in units generating high level of pollution. India is not exception.  India is operating more fraudulent ways. If Impact Assessment Audit is poor this is difficult to identify where the funds have been misused. This violation is done after overlooking the SEBI and RBI guidelines.  Most of the financial players who promise to put their investors' savings into green assets,  in reality park fund for the  polluting companies. Directors report and statement do not change anything.  An ESG Assessment Audit  of the "Axis ESG Equity Fund Regular Growth" is given here. The study is limited to only two industries  where clear investment of this ESG fund is seen. The first one is the Amber Enterprises India Ltd and the second one is the  Maruti Suzuki India Ltd.  

Aim and Objective of "Axis ESG Equity Fund Regular Growth": 

The "Axis ESG Equity Fund Regular Growth",   is a mutual fund of "Axis Asset Management Company Ltd", which in turn is a subsidiary group company of Axis Bank Ltd. 

The  Axis Bank as Principle Owner of the "Axis ESG Equity Fund Regular Growth"  has  the responsibility of using ESG Fund in proper industry. Any misuse of the ESG Fund is breach of  trust of the general investor.  This fund has main objective  "To generate long-term capital appreciation by investing in a diversified portfolio of companies demonstrating sustainable practices across Environmental, Social, and Governance (ESG) parameters using an ESG  Integration approach". 

The Objective of the fund has been beaten if we look the case of Amber Enterprises India Ltd and Maruti Suzuki India Ltd. 

Investment in plastic moulding industry ( Amber Enterprises India Ltd ) is clear violation. This is not a "green" industry due to its high energy consumption, reliance on fossil fuels, and contribution to plastic waste. It is an energy-intensive process that uses non-renewable resources.

Case of Amber Enterprises India Ltd: 

"Axis ESG Equity Fund Regular Growth" has been invested in Amber Enterprises India Ltd  till September 2025 an amount of Rs 16 crore.  The Company Amber Enterprises India Ltd is an original equipment manufacturer (OEM) engaged in manufacturing products using plastic moulding machine, vaccum extrusion machine and using manufacturing process for producing heat exchangers.

Use of Process Plastic Moulding Line - Plastic Vaccum Extrusion Line  

Amber Enterprises India Ltd is using Plastic Moulding Machine & Vaccum Extrusion Machine for producing various plastic products. This industry is using fossil fuel for generating plastic granules. This is high energy intensive process, where petroleum product plastic granules are heated in high temperature and converted into various plastic products. During heating of plastic granules,  the process  releases pollutants like volatile organic compounds (VOCs), sulfur dioxide, and nitrogen oxides into the air, which cause respiratory issues and contribute to air pollution. Thus plastic moulding industry - vaccum extrusion machine  are  definitely not a part of green industry. Because, it has  reliance on fossil fuels which converts into plastic product using energy-intensive processes.  This industry generates plastic waste of large quntities. The industry generates large amount  of plastic scrap, which  ends up in landfills and pollute the environment for hundreds of years.This waste doesn't easily decompose. This is notorious industry as the plastic scrap of manufacturing defects or plastic removed during process is scrapped to the vendors in poor way.   

The moulding machine or vaccum extrusion line release of harmful emissions like volatile organic compounds (VOCs) during manufacturing process. These factors contribute to air, water, and soil pollution, as well as climate change. The process of melting and molding plastic is very energy-intensive. This mostly rely on non-renewable energy sources, which increases greenhouse gas emissions.  Cooling water used for cooling the in the  molding machines by and large become contaminated with pollutants and excess heat. If not treated properly before it is discharged. Thus the water is very high polluting.  

Use of Process for manufacturing Heat Exchangers: 

a) The  manufacturing process and operational issues attracts this industry into polluting industry. The production of heat exchangers uses energy-intensive materials like copper tubing & stainless steel and other metals. This energy intensive product  have environmental costs associated with their extraction, processing, and transportation.

b) Heat exchanger applications, particularly in HVAC and refrigeration, use refrigerants. That  contributes the ozone depletion or global warming. 

c) Operational inefficiencies: Operational issues create environmental problems. For instance, fouling—the buildup of deposits on heat transfer surfaces—reduces efficiency. This  increases energy consumption, and leads to higher emissions.

d) End-of-life disposal: The improper disposal of heat exchangers, especially older models that may contain hazardous materials, lead to environmental contamination.

e) Impact Local pollution: Large-scale industrial heat exchangers, particularly in manufacturing  contribute to localized air and thermal water pollution during their operation. 

Clearly,  the industry "Amber Enterprises India Ltd" do not qualify for this funding. 

Case of Maruti Suzuki India Ltd.

The  ESG Fund "Axis ESG Equity Fund Regular Growth" investment up to   July 2025 is at 19218 shares. This raised to 22968 Shares in September 2025, with an investment of Rs 36.82 Crore 

Maruti Suzuki India Ltd has a significant larger number of fuel based cars then electric cars. The company plans to introduce electric cars by 2030.  So far the investment of "Axis ESG Equity Fund Regular Growth" in Maruti Suzuki India Ltd, shall only pour the belly of fuel based cars. This industry  has contributed  emission of greenhouse gases like carbon dioxide  which causes global warming, and other pollutants such as nitrogen oxides, carbon monoxide,  unburned hydrocarbons, and particulate matter. These emissions lead to smog, acid rain, and respiratory diseases. This pollutant industry is the  largest contributor to climate change. 

In 2023 the Fossil fuel vehicles  based transportation sector caused about 31% of total U.S. energy-related CO2 emissions - approximately 1,489 million metric tons (MMmt).

What SEBI Law Says: 

In June 05, 2025 SEBI issued Framework for Environment, Social and Governance (ESG) Debt Securities. The SEBI in Clause 8 (a) says,  a measure to mitigate the risk of purpose- washing and not being “True to Label: An issuer desirous of issuing social bonds/ sustainability bonds shall ensure the following to avoid occurrence of purpose-washing. It says "While raising funds for social objects/ sustainability objects, it shall continuously monitor to check whether the form of operations undertaken is resulting in reduction of the adverse social impact/ sustainable impact, as envisaged in the offer document" and shall provide Independent third party Impact Assessment report for sustainability-linked bonds  along with its annual report and financial results. The issuer shall appoint an independent third party Impact Assessment Auditor to ascertain that the sustainability-linked bonds are in alignment with  the ESG standards.  

What RBI Guideline Law says:

RBI Guideline vide RBI/2023-24/14 defines in Clause 2(d) “greenwashing”. This  means the practice of marketing products/services as green, when in fact they do not meet requirements to be defined as green activities/projects. In Clause 5 (iii) the allocation of proceeds of green deposits and its reporting, by third-party verification/assurance of the allocation of proceeds and the impact assessment by Third party is mandatory. 

Conclusion: 

The Regulator SEBI & RBI shall be more cautious towards such misuse of funds. The investors have trusted for the sustainability and ESG oriented green projects. Not such pollutant industries. This is breach of trust.