While ICRA notes that Indian textile companies have achieved a major water-management milestone, the increasing trend in waste intensity remains an area of key sustainability challenge. As many as 74 per cent of textile companies have shifted to ZLD processes in FY2025 with a significant shift to sustainable water practices in one of the most resource-intensive sectors of India, said the latest ICRA ESG Ratings report.
The report states that the sustainability journey of the industry is gathering steam on increasing pressure towards alignment to global and domestic ESG standards. The sector, which was mainly intensive in the consumption of water and energy, especially in the yarn, fabric, and integrated segments, is now looking for resource efficiency and circularity in operations. ICRA Research rated the progress of 191 listed companies (representing about three major segments–Apparel, Yarn & Fabric, and Integrated) on water management, waste recycling, and renewable energy for the two-year period ending FY2023-FY2025.
The findings indicate that although water management practices are strengthening through wider ZLD adoption, waste generation intensity rose by about 19 per cent in FY2025. This surge, according to the report, could partly be explained by better disclosure practices. The improvement in the rate of waste recycling, however, constituted 80 per cent in the FY2025 period, as against 77 per cent in FY2023, indicating the gradual progress being made towards resource circularity.
While 57% of integrated companies have formal ESG committees, 71% have set targets for reduction in emissions. In comparison, the apparel and yarn and fabric segments are taking smaller steps toward building such frameworks. According to ICRA, this growing focus on governance will be critical for global alignment and strengthening of climate accountability across the sector.
Despite this, renewable energy sources comprise only about 8 per cent of the industry’s total energy mix in FY2025. The majority of it comes from solar and biomass-based systems that offset thermal energy demand in dyeing and finishing processes. Furthermore, just 21 percent of companies disclosed their Scope 3 emissions, reflecting the early stage at which value chain inclusion efforts stand. With the increasing pressure from global initiatives like the European Green Deal and Carbon Border Adjustment Mechanism, Indian textile players are being urged to accelerate their decarbonization efforts.
Commenting on this, Sheetal Sharad, Chief Ratings Officer, ICRA ESG Ratings Limited, said, ‘The textile sector has begun its transition to sustainable operations; however, this needs to be at a much faster pace. Practices were traditionally adopted on adoption of compliance norms, but best practices are expected to improve resource efficiency and business resilience in the long term. She added, “Scalation of sustainable practices would necessitate investment in advance technologies like low-liquor-ratio dyeing, hybrid RO systems, and renewable energy solutions among others.
