Evaluating the impact of esg norms on india’s textile industries : a focus on smes and consumers

Abstract

This Capstone Project explores the dynamic intersection of sustainability and industry through the lens of Environmental, Social, and Governance (ESG) norms in India's textile sector, with a specific focus on Small and Medium Enterprises (SMEs) and consumer behavior. As global markets shift toward sustainable practices, Indian textile SMEs face both regulatory pressure and strategic opportunity in aligning with ESG frameworks. Through a mixed-methods approach combining financial analysis, consumer psychology, and qualitative interviews with few industry founders, this study evaluates the practical, economic, and behavioral challenges of ESG adoption. Key findings reveal that while ESG integration offers long-term benefits such as green financing, export eligibility, and improved brand equity, the immediate financial burden-especially for ZLD implementation, significantly compresses SME profit margins. From a behavioral standpoint, younger and higher-income consumers exhibit stronger alignment between ESG values and purchase behavior, while middle - and low -income consumers face an intention -behavior gap driven by affordability and perceived value. The study highlights critical gaps in ESG communication within the textile industry, particularly the underutilization of sustainability narratives in marketing. The project concludes by recommending a dual approach: improve ESG infrastructure and integrate behavioral economics into marketing strategies to bridge the gap between ethical production and ethical consumption.