CS Professional December 2025 Question Paper ESG - Principles and Practice

FOR CS PROFESSIONAL EXAM PREPARATION

CS Professional 2025
Question Paper ·
ESG - Principles and
Practice
EXAM YEAR TYPE

CS Professional 2025 Question Paper
SUBJECT DATE

ESG - Principles and Practice December 2025

Notes · Sample Papers · Previous Year Papers · Mock Tests

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Roll No. .....................................

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Time allowed : 3 hours Maximum marks : 100

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Total number of questions : 6 Total number of printed pages : 15

NOTE : Answer ALL Questions.

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PART–I

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min 2007 and got listed, when it undertook large-
1. Drishya Infratech Limited (‘DIL’) was incorporated in 1998 as a private company and was
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s and allied manufacturing services. Headquartered in
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converted into a public limited company
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Chennai, the Company rapidlyag
scale expansion in construction, energy,
diversified into real estate, renewable energy, logistics, and
even financial services through subsidiaries. With a paid-up capital of ` 1,200 crore and
consolidated annual turnover of ` 8,500 crore, DIL positioned itself among India’s fastest-
growing conglomerates. The Board of Directors consisted of twelve members, including four
independent directors, one woman director and promoter/executive directors. Though compliant
with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, proxy

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advisory firms often commented that the independence of directors was more on paper than

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. constituted, but
c. o directors with the promoter family. Other mandatory committees were
in substance, given the long-standing personal and professional ties of most “independent”

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ethe promoter-chairman,
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duly

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their functioning was often perfunctory, with decisions driven largely by

la Ranjhan, whose family collectively held 58% of the
a equity.
Company’s

In the early years of its growth, DIL emphasized on being a compliant organization and
even claimed to have adopted global best practices, including OECD Principles of Corporate

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Governance and United Nations Sustainable Development Goals (SDGs). It presented glossy
annual reports showcasing commitments to Environmental, Social and Governance (ESG) values,
including Business Responsibility and Sustainability Reporting (BRSR) in line with SEBI’s mandate
for top 1,000 listed entities. Its renewable energy subsidiary claimed reductions in carbon
emissions, while its logistics arm spoke of gender diversity in employment and its financial
services subsidiary highlighted financial inclusion efforts. On the surface, the Company appeared
as a model of corporate citizen, aligning itself with CSR activities, spending over ` 50 crore
annually on education, sanitation, and rural infrastructure projects. DIL also declared its adoption
of the “Integrated Reporting” framework, in accordance with international standards. Analysts
praised DIL’s meteoric rise, its issuance of green bonds and its consistent dividend policy.
Shareholders received assurances that governance structures were strong and regulators accepted
its disclosures as adequate. However, beneath the surface, tensions were growing, whistleblower
complaints pointed to irregularities in awarding EPC contracts to related entities, statutory
auditors raised concerns about inadequate internal controls and minority shareholders questioned
the opaque decision-making process.

Environmental activists highlighted that DIL’s mining and infrastructure projects had caused
large-scale deforestation, violating environmental clearances and that disclosures in the BRSR
report were selective rather than comprehensive. Moreover, global ESG rating agencies
downgraded DIL’s governance scores citing weak board independence and poor disclosure
practices. The unravelling began in 2024, when an investigative journalist exposed that DIL
had overstated its renewable energy achievements in its sustainability report. An independent
review found that only 40% of claimed solar capacity was functional, with the rest being
under litigation or awaiting approvals. SEBI initiated an inquiry under SEBI (LODR), examining
misstatements in annual reports. At the same time, the Ministry of Corporate Affairs received
complaints alleging siphoning of funds through related party transactions with shell companies
controlled by relatives of promoter directors. The independent directors, instead of exercising
their duties, remained passive, leading to questions about their effectiveness. Further, CSR
funds, which were supposed to be spent on rural education were allegedly diverted to trusts

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managed by the promoters. Institutional investors, guided by proxy advisory firms, began voting

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against board resolutions, citing poor governance practices. The situation worsened when a
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tragic accident at one of DIL’s construction sites killed 14 contract workers, revealing lapses

la s health and safety standards. NGOs alleged violation of SDG 8 (DecentaWork) g
g ESG social safeguards, which directly contradicted DIL’s sustainability commitments. Media
in occupational

aand
backlash and social media activism damaged DIL’s reputation, causing a 35% fall in its share
price within weeks. Credit rating agencies downgraded its debt citing governance risks and
banks tightened lending norms. The Board was accused of non-compliance with provisions
relating to performance evaluation of independent directors. In response, the Board announced
separation of the roles of Chairperson and CEO (in line with SEBI recommendations),

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reconstitution of the Audit Committee with truly independent experts and appointment of a

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Big 4 firm to conduct a sustainability audit. Yet, damage had been done, foreign investors

l a shad complied with structural mandates such as appointing
withdrew funds, retail shareholders filed class-action

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imposed penalties. While the Company
independent directors, forming committees, and disclosing CSR spends, it failed to internalize
the spirit of accountability, transparency, fairness, and responsibility.

In the background of above facts, answer the following questions :
(a) Examine the roles and responsibilities of DIL’s independent directors, in the context

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of the Companies Act, 2013 and SEBI (LODR) regulations.

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(b) Indicate the factors and parameters to be considered for evaluation of independent

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(c) Outline the implications of CSR irregularities by the Company and suggest ways to

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strengthen the CSR governance to avoid misuse of CSR funds.
Examine how weak risk management contributed to crisis at DIL and recommend
steps to strengthen the risk framework.

(5 marks each)
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2. (a) A complaint was filed before the Lokpal against a senior officer of a central public
sector undertaking, alleging misuse of funds in awarding a contract. During the preliminary
inquiry, the officer failed to produce the relevant documents despite repeated notices.
The Lokpal’s Inquiry Wing, therefore, directed him to appear personally and submit
the required records. At the same time, the Lokpal also requisitioned certified copies
of certain related files from a government ministry and issued a commission for recording
the statement of a key witness who was bedridden and unable to attend the proceedings
in person. The officer challenged the authority of Lokpal, arguing that it did not have
the same powers as a civil court to summon individuals, demand documents, or issue
commissions.

With reference to provisions of the Lokpal and Lokayukta Act, 2013, examine whether
the contention of the officer is tenable.
(5 marks)
(b) Ananthi Advisory Private Ltd. (‘AAPL’) a SEBI-registered proxy advisory firm, provides
voting recommendations to institutional investors for resolutions at Genuine Tech Ltd.’s
(GTL) annual general meeting. While reviewing the report, the management of GTL
notices that the methodology and sources used to formulate the recommendations are
not fully transparent and some recommendations seem to be based on incomplete
information. The Company also learns that AAPL offers consultancy services to certain
shareholders, raising concerns about potential conflicts of interest. GTL wishes to ensure
that its clarifications are considered, any necessary amendments are communicated to
investors and the policies on disclosure, communication, and conflict-of-interest policies
are fully adhered to. GTL has appointed you, a Company Secretary, seeking your
advise to engage with AAPL, in compliance with SEBI’s regulatory framework. Advise
the Company.
(5 marks)

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(c)
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Ayeman Ltd., a listed company, has recently received multiple complaints from its
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.co regarding delayed receipt of dividend payments, non-receipt of annualsem
em and delays in issuance of duplicate share certificates. Additionally, some debenture
shareholders

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la holders have raised grievances concerning interest payments and maintenance of asecurity
reports,

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cover. The Company’s management wants to ensure that these issues are addressed

in line with regulatory requirements and enhance the overall satisfaction of its security

holders. The Company has a Stakeholders Relationship Committee in place, chaired

by a non-executive director, with a composition of three directors including one

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independent director. The Chairperson is expected to attend the upcoming Annual General

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Meeting to respond to shareholder

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l the Stakeholder Relationship Committee under SEBI
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Explain the key responsibilities of

(LODR) Regulations 2015.

(5 marks)

3. (a) The Board of Meghank Technologies Ltd. convened a meeting through video conferencing

to approve the quarterly financial results. During the meeting, one Director lost connectivity

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and continued participation via telephone for the remaining agenda items. Another Director,

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who had not given prior intimation of his intention to join electronically, logged in

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directly through video conferencing. Later, a shareholder challenged the validity of the

la Board’s decisions, qustioning whether the quorum was properly constituted.

Examine the legal validity of this board meeting in light of the Companies Act, 2013.

(5 marks)

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(b) BlueWave Pharmaceuticals Ltd., a listed company, has a robust internal policy to prevent
insider trading in line with SEBI (Prohibition of Insider Trading) Regulations, 2015.
The Company’s compliance officer maintains a structured database of unpublished price
sensitive information (UPSI) and persons with access to it. Employees undergo periodic
training on insider trading norms. Recently, a senior R&D scientist was found sharing
trial results of a new drug with a close friend before official disclosure. The Compliance
Officer initiated an inquiry, imposed penalties and reported the incident to SEBI,
strengthening internal controls and demonstrating adherence to Regulations.
Explain the internal controls that BlueWave can implement to effectively prevent insider
trading.
(5 marks)
(c) Trinkle Manufacturing Ltd., a family-owned company, plans to expand internationally
and is exploring models for long-term sustainability. The Board is studying family business
practices globally, especially in Germany and Japan. The Company is particularly interested
in succession planning, continuity and strategies that ensure longevity over multiple
generations.
As a corporate governance consultant, advise the Company, on the key lessons it
can learn from the Japanese ‘ie’ system.
(5 marks)

Attempt all parts of either Q. No. 4 or Q. No. 4A

4. (a) Shopo Sphere Private Ltd., a fast-growing e-commerce platform, faced challenges with
inconsistent product descriptions, duplicate listings and inaccurate pricing across multiple
sellers. To Address this, it implemented a strategy aimed at ensuring accuracy, consistency
and compliance in all product-related data. The strategy included standardized product

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taxonomy, mandatory data quality checks before listings go live, and integration of

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AI-driven tools to detect anomalies in images, descriptions and prices. A centralized
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scategories and sales channels. Regular audits, seller training programs, and defined
product information management (PIM) system was introduced to unify data across

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ag escalation protocols for incorrect data were also part of the governance framework.
As a result, customer complaints dropped by 35%, return rates decreased and search-
to-purchase conversion improved. The initiative enhanced customer trust strengthened
compliance with consumer protection norms, and streamlined seller onboarding, making
Shopo Sphere more competitive in the crowded e-commerce market.

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Outline the key points which an e-commerce business should consider for designing
product data governance strategy.
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(5 marks)

(b) ag
Ravi, a senior procurement manager at GreenTech Solutions, faced a dilemma when
his Company invited bids for a multi-crore supply contract. One of the bidders, Eco
Mart Private Ltd., was owned by Ravi’s close friend. Eco Mart submitted the most
competitive bid, offering quality products at a lower price than other vendors. However,
the Company policy clearly requires employees to declare any conflict of interest and
recuse themselves from related decision-making. Ravi’s friend privately assured him

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. financially,
of a generous “thank you” gift if Eco Mart secured the deal. Ravi knew awarding

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eto personal and legal
the contract to Eco Mart without disclosure would benefit the Company
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consequences. He had to decide whether to maintain professional
the conflict or act in his friend’s favor and risk his reputation. Ravi was evaluating
various approaches to solve his ethical dilemma. Advise Ravi.

(5 marks)
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(c) Info Trust Ltd., a leading IT-enabled services company, manages sensitive client data
from global banking, healthcare, and e-commerce firms. With increasing digital transactions
and reliance on cloud-based operations, the Company faces heightened risks of data
breaches, unauthorized access and regulatory non-compliance. Recently, a client raised
concerns after discovering that data storage practices in one of Info Trust’s offshore
centres did not comply with EU’s General Data Protection Regulation (GDPR) norms.
At the same time, domestic regulators have emphasized compliance with India’s Digital
Personal Data Protection Act, 2023 (DPDP Act), which requires companies to establish
strong mechanisms for data privacy, security, and accountability. The Board of Info
Trust recognizes that poor data governance could result in legal penalties, reputational
loss, and erosion of client trust. Investors and clients alike are demanding a comprehensive
data governance strategy ensuring data accuracy, transparency, privacy protection, and
ethical usage. Given the developments in technology, the management suggested the
use of Artificial Intelligence (AI) in data governance.

Outline the benefits of AI powered data governance.

(5 marks)

OR (Alternative questions to Q. No. 4)

4.A. (i) Suvidha and Sumedha were friends and batch mates in MBA. They started a business
called ‘Locosilks’, a start-up which procures silk garments locally for exporting to
other countries. This idea came from their strong understanding of the local sources
and their niche marketing skills. They wanted to tap the unexplored local procurement
and develop a robust supply chain. Explain local procurement program and its benefits.

(5 marks)

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(ii) Amanda Plc, a medium-sized UK-listed company is seeking to enhance its board-

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level oversight of cyber risk following the publication of the UK’s new Cyber Governance
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sthe Company, on applying the Code’s principles into Boardroom governance.aIng the
Code of Practice. Nayan, a Compliance professional has been requested to advise

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ag background of UK Cyber Governance Code, advise the Company in aligning with
Code’s principles and reporting practices for cyber risks.

(5 marks)

(iii) Jona Ltd., is planning to go for an IPO and appointed Vel, a Practising Company
Secretary to support them in this process. During one of the meetings, Vel informed

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the Board of Directors of Jona Ltd., that the Company has to host certain information

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on its website and should provide timely updates to support investor transparency

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and regulatory compliance. The Board
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of information that a listed company is required to host on its website.

Prepare a brief note indicating the information that a listed company should host on
its website, as per under SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015.

(5 marks)

PART–II
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m Attempt all parts of either Q. No. 5 or Q No. 5A . c
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5. Keyor Infoware Private Ltd., a Bengaluru-based technology company, has grown significantly
in the last decade, specializing in artificial intelligence, data analytics,
solutions. Founded by a group of IIT graduates, it now employs over 1,200 people and
reported a turnover of ` 220 crore in the last financial year. The Company services global
clients in sectors such as banking, healthcare, and e-commerce and is gradually emerging

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as a recognized player in the technology consulting space. However, the rapid growth has

exposed the Company to several governance and risk management challenges. Recently, a

fraudulent financial transaction was detected within the accounts department. An employee,

in collusion with an external vendor, manipulated invoices and diverted funds over a period

of six months. Although the fraud was identified and reported, the incident raised questions

about the adequacy of internal controls and fraud prevention mechanisms.

In another instance, the Company faced a major reputation risk when an overseas client

posted negative feedback on social media regarding project delays. The post went viral within

hours, leading to adverse commentary and speculation about the Company’s delivery capability.

The management realized that while technical expertise was its strength, Keyor lacked a robust

framework for crisis communication and reputation management.

In a subsequent Board meeting, directors emphasized the need for a structured risk assessment

framework covering financial, operational, reputational, compliance and information security risks.

They insisted that risk assessment should not be a one-time exercise but an ongoing process

integrated into corporate governance practices. Further, with turnover at ` 220 crore and

borrowings standing at ` 80 crore, the Board sought clarity on the applicability of internal

audit provisions under the Companies Act, 2013 and whether the company was now statutorily

required to appoint an internal auditor. The Board also appointed a Company Secretary with

the mandate to strengthen governance and compliance mechanisms.

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Based on the above facts, answer the following questions :
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em the fraud risk management processes, that should be implemented to prevent
a
(a) in brief the risk management process.

(b) sElaborate g l
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(c) Outline the key principles of reputation risk management and their application in addressing
negative stakeholder feedback in an organization.

(d) With reference to provisions of Companies Act, 2013, evaluate whether the Company

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is required to appoint an internal auditor.

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m to Q. No. 5)
(5 marks each)

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OR (Alternative questions
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ag multinational IT services firm, had earned a reputation
5.A. Sepay Technologies Ltd., a Pune-based
for its cutting-edge solutions in cloud computing and artificial intelligence. With over 12,000
employees and clients in 25 countries, the Company was considered a trusted partner in
digital transformation initiatives. The Company had good processes and procedures in place
which would help them navigate any unforeseen circumstances.

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In March 2025, Sepay faced a critical challenge when a sophisticated ransomware attack

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locked its central client management system. Payroll operations were stalled, sensitive customer
data was at risk and employees could not access emails or work lfiles
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a the Crisis Management Plan
leading to widespread panic. The Board immediately activated
(CMP). A cross-functional crisis committee, including finance, HR, IT, and marketing heads,
was tasked with responding. The Finance Manager ensured emergency funds were released

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to hire external cybersecurity experts and kept regulators informed to maintain compliance.
HR focused on employee morale, establishing alternative communication channels and ensuring
salaries were processed via backup systems. Marketing and PR teams communicated proactively
with clients, mitigating reputational risk. Simultaneously, the Business Continuity Plan (BCP)
was implemented. Sepay had previously identified critical functions client support, payroll and
internal communications as “essential services.” Within 72 hours, makeshift systems supported
priority client accounts. Off-site data backups enabled partial restoration of operations. The
BCP also guided coordination with vendors and cloud service providers, minimizing disruption
in client service delivery. The Disaster Recovery Plan (DRP) proved equally crucial. It outlined
steps to restore IT infrastructure and mitigate technical losses. The IT team, working with
external experts, isolated infected systems, cleaned servers and restored data from secure
backups. Thanks to these coordinated efforts, Sepay was able to restore 80% of operations
within two weeks, regaining client confidence. This incident highlighted the interdependence
of CMP, BCP, and DRP. While the CMP enabled immediate decision-making and communication,
the BCP ensured business continuity and the DRP provided technical restoration. Post-incident,
the Board recognized the need to strengthen client communication and conduct regular simulation
testing.

The cyberattack became a turning point for Sepay. The Company institutionalized quarterly
simulation drills, upgraded data security protocols and refined the CMP to include social media
crisis management. Leadership acknowledged that without these pre-designed frameworks, Sepay’s
reputation and financial stability could have suffered irreparable damage. There was a detailed
discussion about the event and the risks being addressed. One of the board members suggested
that, risk transfer should be considered rather than risk reduction. Further the Board and
the management were keen to appoint a consultant who would do a risk analysis and submit
a detailed report highlighting various aspects of governance risks as well. One of the directors,

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who was on Board of another conglomerate, mentioned to the board members that the risks

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are not limited to cyber security risk or governance risks alone, they even include climate
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risk.

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the background of above facts, answer the following questions :

(i) Distinguish between risk transfer and risk reduction.

(ii) Explain the cyber security risk management process.

(iii) What are the changes and improvements, which the Company should put in place
to address cyber security risks.

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(iv)
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Explain climate risk and outline the steps involved in climate risk management process.

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(5 marks each)

ag PART-III

6. (a) Apex Appliances Ltd., a mid-sized listed Indian company engaged in the manufacture
of consumer electronics, is in the process of preparing its first Business Responsibility
and Sustainability Report (BRSR) pursuant to the disclosure requirements notified by
the Securities and Exchange Board of India (SEBI). The Board of Directors have

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recognized that sustainability and responsible business conduct are no longer matters

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of voluntary choice but essential obligations for listed companies. Consequently, the

em management in implementing the BRSR Core framework inla
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Board has instructed the Company Secretary to take a leading role in guiding senior

las a g a way that adds real value
to stakeholders. The decision to embark upon formal sustainability reporting has generated
considerable discussion within the Company. Apex has enjoyed consistent profitability
and a stable market presence, but sustainability has never been formally integrated

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into its strategy. The Company Secretary highlighted that BRSR is not only about
regulatory compliance but also about demonstrating to investors, customers and society
that the business is being conducted in a responsible and transparent manner. The
Board concurred that disclosures made under the BRSR must be decision-useful,
comparable across periods and benchmarked against peers to build investor confidence.
During the initial scoping exercise, Apex identified several practical challenges. This
led to confusion within the Company regarding alignment and applicability. Despite
these hurdles, the leadership of Apex Appliances is convinced that credible and well-
structured sustainability disclosures can generate long-term reputational capital, enhance
investor trust and help secure regulatory goodwill. In addition, ESG-sensitive institutional
investors are increasingly demanding transparency before allocating funds and customers
are also more inclined towards brands perceived as responsible.

The Company Secretary has therefore emphasized that Apex must avoid treating BRSR
as a tick in the box exercise. Instead, it should use the framework to systematically
integrate ESG considerations into its corporate governance, risk management and strategic
decision-making. The report should highlight not just policies on paper but actual practices,
measurable outcomes and forward-looking targets. As Apex prepares its maiden BRSR,
the management must carefully decide on the approach, scope and processes to be
adopted. It must also develop systems for data accuracy, consistency and verification,
as stakeholders will expect reliability in disclosures.

In this background, answer the following :
(i) As the Company Secretary of Apex Appliances Ltd., explain the approach
adopted for developing the BRSR Core framework. Further, identify the practical
challenges that the Company may face in implementing BRSR reporting.
(ii) Discuss the nature of disclosures mandated under the Business Responsibility
and Sustainability Report (BRSR) framework.
(4+4=8 marks)

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(b) Sena, a senior academician was part of research team of KITE University and was

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involved in research about Environmental, Social and Governance (ESG) and its relevance

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strends’, wherein he highlighted various aspects of ESG and its relevance. He explained
to current day business. He presented a paper in a Seminar titled ‘ESG—Current

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ag that with increasing global focus on sustainability and responsible business conduct,
ESG has emerged as a critical area for corporate strategy and compliance. In the
United States, Europe, the Middle East, and Africa, new regulations are being introduced
to ensure that companies truly meet ESG requirements instead of resorting to
“greenwashing.” By 2024, ESG investments reached nearly $12.4 trillion in the U.S.,
highlighting the importance of this trend. The U.S. SEC has proposed mandatory

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. requires over 50,000 companies to comply
disclosures on Scope 1 and Scope 2 carbon emissions, while Europe’s Corporate

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ethe increasing global emphasis on sustainability, 2025
Sustainability Reporting Directive (CSRD)

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lthe regulatory landscape as companies prepare for an influx
with ESG disclosure norms. With

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marks a significant shift in
of new ESG reporting mandates and disclosure requirements. Organizations are expected
not only to demonstrate compliance but also to proactively integrate ESG considerations
into their long-term business strategy. He emphasised that ESG reporting is of great
relevance to the business and community at large. While the session was insightful,
some of the participants had few questions.

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In the background of above facts, answer the following :

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(i) Outline the importance of ESG reporting.

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a mandates.
Explain the key changes that companies must establish
for the challenges posed by evolving ESG reporting
(3+4=7 marks)

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