Introduction: With a mission inline with sustainability, zero emissions, and ESG (Environmental, Social, Governance) principles, India's first EV ride-hailing startup, BluSmart Mobility, came into existence in the year 2019 across Delhi-NCR, Bengaluru, and Mumbai, with strategic alliances and investor trustas an asset-light, technology-integrated venture. In April 2025, the company abruptly suspended its operations due to corporate governance failure, financial misappropriation and regulatory actions by SEBI. Purpose: This study explores BluSmart Mobility's rise and regulatory collapse during 2019-2025 -How ESG integration, without corresponding internal controls and ethical governance, can lead to operational failure despite a strong market entry. The risk assessment matrix in the study highlights key risks and how the founders were not able to sustain their first mover advantage and deliver on the brand promise of zero ride denials, on-time service and clean mobility. Methodology: The present study is a qualitative study. Data has been collated from various secondary sources, public financial reports, Sebi filings, media news, Economic Times and company case studies, e.g Amazon Web Services (AWS).The analysis make suse of a Risk Assessment Matrix to establish and analys epivotal business and governance risks. Findings:  Weak Corporate Governance led to high-priority risks, including regulatory action, loss of investor trust, which were critical elements to BluSmart’s pause. Medium risks, such as customer expectations and reliance, supply chain disruptions and reputational damage, escalated the situation. Conclusion: Finding indicates that long-term sustainability demands ethical leadership, openness and anticipatory risk management.  Policy Implications: The study suggests higher regulatory supervision for startups that have been labelled as ESG, mandatory audit of governance for venture-funded firms, and real-time financial reporting to enhance stakeholder trust and curtail systemic risk in the startup ecosystem.