greenwashing research

Review Article
Open access
Published: 17 August 2019

Grey zone in – greenwash out. A review of greenwashing research and implications for the voluntary-mandatory transition of CSR

Lucia Gatti 1 ,
Peter Seele 2 &
Lars Rademacher 3

International Journal of Corporate Social Responsibility volume 4 , Article number: 6 ( 2019 ) Cite this article

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As public concern over greenwashing has grown in the last two decades, academic research has increased correspondingly, and there is now a substantial body of research addressing issues related to greenwashing. In this paper, we therefore review and analyze greenwashing research, to provide an evaluation of trends and progress in the field and a synthesis of the empirical and conceptual results presented in existing studies.

Our main finding leading to our theory contribution is the criticism raised in greenwashing research that the entirely voluntary CSR (Corporate Social Responsibility) approach facilitates the diffusion of greenwashing. The voluntary idea of CSR is still prevalent in the CSR literature and appears to be a grey-zone that creates space for misleading ‘green’ communication.

Consequently, we propose that greenwashing could be better prevented with a combination of voluntary and mandatory aspects. The new paradigm should promote creative and effective corporate CSR initiatives, while at the same time design the limits and the rules for their accomplishments and communication, as firms would risk breaching legislation when overstretching CSR messages.

Introduction

Over the last decades, companies’ instrumental use of green and social claims has become a central topic in the public debate about corporate social responsibility (CSR). In this context, an increasing number of organizations have been accused of “not walking the talk,” which means their CSR claims on environmental or social issues have not been followed or supported by actual corporate activities (Walker & Wan, 2012 ). Such divergence between socially responsible communication and practices is commonly known as greenwashing .

Three decades after the conceptualization of the term “greenwashing,” the practice has grown enormously (Walker & Wan, 2012 ) and is now more sophisticated (Theguardian, 2016 ).

According to Furlow ( 2010 ), the proliferation of environmental disinformation has become so common and is of such a concern, that media discourse on greenwashing has parallel increased. Several non-governmental organizations (NGOs), such as Greenpeace or TerraChoice, assume today the roles of market monitors or “watchdogs.” In addition, the press expresses a growing concern about causes and consequences of greenwashing (Du, 2015 ). As a result, consumers are increasingly skeptical about the authenticity of corporate environmental claims (Lyon & Montgomery, 2013 ).

As the public concern over greenwashing has drastically grown in the last two decades, academic research has increased correspondingly, and there is now a substantial body of literature addressing issues related to greenwashing. Indeed, more than 1.315 scholarly articles are currently Footnote 1 mentioning the term “greenwashing” or “greenwash”.

Because of the centrality and actuality of the topic in both the public and academic CSR debate, a review of the literature is needed to understand how scholars have conceptualized and discussed the phenomenon. Indeed, different and sometimes contradictory definitions have thus far been provided and more research is needed to categorize the variety of greenwashing discussed in literature as well as its implications and consequences for business and society (Lyon & Montgomery, 2015 ; Seele & Gatti, 2017 ). To our knowledge, only one article has reviewed the academic debate around greenwashing. By focusing on the means and ends of greenwashing, the Lyon and Montgomery’s ( 2015 ) paper offers valid insights and directions for future research. However, their detailed analysis of the literature needs to be updated, given the fact that it stops in 2013 with a total number of 34 papers. Therefore, by including more than twice as many papers compared to Lyon and Montgomery’s literature review on greenwashing, we aim to expand their analysis in order to identify and discuss new issues in the fields and to provide a structured summary of the empirical and conceptual results presented in existing studies.

Our main finding leading to our theory contribution is the criticism raised in greenwashing literature that a totally voluntary and unregulated CSR approach facilitates the diffusion of greenwashing. Indeed, current predominant voluntary approaches create space for grey zones allowing for misleading communications. However, also an exclusive mandatory approach may favor the establishment of grey zones where companies look for ways around the rules. This is particularly true in the today’s interconnected and globalized world, where globalization makes self-organizing processes necessary to solve the deficit in regulation (Scherer et al. 2006 ).

Building on the discussion about the legality of greenwashing, our paper links to and advanced the debate about the voluntary versus mandatory nature of CSR through the lens of greenwashing scholars, thereby providing insights into a burgeoning paradigm shift towards an integration of the voluntary and mandatory perspectives in the application of CSR and corporate CSR reporting and communication.

The paper suggests that greenwashing could be better prevented with a combination of voluntary and mandatory aspects designed to promote CSR and regulate its application and communication, (which is currently in the process of being developed in several countries).

The paper proceeds as follows: we summarize the methodology applied to select and analyze the academic articles about greenwashing. In sections 3 and 4 we present the main results of our quantitative and qualitative analysis. We then discuss these results to highlight implications and contributions of the greenwashing literature, as well as trends and progress in the field. In the last section, we finally present the main insights of the paper, particularly the theoretical contribution suggesting a reduction of grey zones and an increase in clarity and credibility, to limit the ‘temptation’ to create misleading green messages, which could open the door to accusations of greenwashing.

Method of the systematic literature review

To identify trends and progress in the field and provide a synthesis of the main issues discussed in literature, we conducted an extensive review articles of the literature. Indeed, review articles play a role in discovering critical issues relevant to the topic and in synthesizing the main trends and perspectives discussed as well as the main methodologies and research techniques that have been used (Randolph, 2009 ).

As Randolph ( 2009 ) suggested, when conducting a systematic and reliable literature review, the data collection process should begin with an electronic search of academic databases and the Internet. To identify the academic literature on greenwashing, we therefore employed keyword searches using the ABI/Inform Global database, considered the most comprehensive source of information on business research (Lyon & Montgomery, 2015 ), and Google Scholar. For the ABI/Inform database, we first began with a general search to assess the dimension of literature citing the term greenwashing. Therefore, we applied the keywords “greenwash” or “greenwashing” to all the fields (including the title, abstract, keywords and full text of articles) and selected English articles published in scholarly journals. A total number of 1.273 articles in the period from 1995 to 2018 were retrieved from this search. Footnote 2 Among the different journals publishing articles about greenwashing, the Journal of Business Ethics represents the top journal in terms of published articles (212 papers), followed by the Journal of Cleaner Production (97), and the Social Responsibility Journal (29). Table 1 reports the list of journals publishing more than 10 articles citing “greenwashing” or “greenwash” to identifying the top journal list of greenwashing research.

In order to identify articles with a clear focus on the topic, as opposed to those merely citing the term, we restricted our search to papers that mention the search terms in the title or abstract. This selection process yielded 136 scholarly articles. After a content review, 62 articles were excluded from the analysis. Although they mentioned greenwashing in their title and/or abstract, greenwashing did not represent a central construct or variable in these articles, or they presented an English title and abstract, but the article content was not in English.

The same keyword searches were applied to the Google Scholar search engine to detect relevant articles, which were not retrieved by the ABI/Inform search. Twenty scholarly articles not included in the ABI/Inform list were identified and added to our sample. The other articles returned by the Google Scholar search matched the previous sample or comprised non-academic papers. The final list, comprising 94 academic papers, Footnote 3 was updated and finalized on December, 2018.

Quantitative data analysis

To assess the status and development of the academic literature on greenwashing, we first categorized the 94 academic articles according to a set of variables: year of publication, type of research (empirical research, conceptual paper, literature review), methodological approaches (qualitative, quantitative, mixed method), methodological techniques (case study, content analysis, model development, analysis of secondary data, survey research method, experimental research method, focus group, visual sociology technique), scope of research (accounting, business ethics, corporate communication, economics, finance, law, management, marketing, political economics), focus of research (environmental issues, social issues, environmental and social issues, ethical issues), and theoretical framework (instrumental, political, ethical, integrative).

The coding process involved two different coders categorizing the collected articles separately. For all the variables mentioned above, we calculated the intercoder reliability. Among the various indices proposed in the literature, we employed Cohen’s kappa (k), which is generally considered a valid measure to assess the level of agreement among coders in a content analysis. While there is no objective standard indicating acceptable levels of intercoder agreement for k, Landis and Koch ( 1977 ) suggest that values lower than 0.20 indicate slight or no agreement, values between 0.21 and 0.40 correspond to a moderate level of agreement, values between 0.61 to 0.80 indicate a substantial agreement, while values higher 0.81 correspond to an almost perfect agreement. The test of the intercoder agreement for k was performed for the main variables considered in the study. The k was significantly different from zero (at the 0.05 level) with coefficients between 0.67 to 1.00, thus indicating an acceptable level of agreement. The detailed of the tests and their results are reported in Appendix.

The analysis of the years of publication reveals that, in general, publications on greenwashing are increasing in number. Before 2007 there were only one or two publications on the topic per year. Since the 2008 they continue to increase, reaching 13 publications in 2018. This seems to be a sign of the current productive status of greenwashing research and supports the idea that the diffusion of greenwashing practices in business fields has been accompanied by a development of related literature.

In relation to the “type of research,” each paper was classified as either “conceptual,” “empirical” or “literature review.” Following Lyon and Montgomery ( 2015 ), the conceptual category included those papers discussing philosophical issues, offering frameworks or models for classifying greenwashing related topics, or those developing theories and hypotheses about greenwashing. Empirical papers included both qualitative and quantitative research studies, and they were analyzed in depth to identify the methodological approach and technique used in each study.

As previously mentioned, we only found one literature review revising greenwashing research, which suggests the necessity of deeper analysis of the literature to see how research about the topic is evolving. We also identified one book review. Among the other articles, 32 studies were categorized as conceptual. The remaining 60 articles comprised empirical papers. While conceptual studies show uniform distribution across the publication time frame (1997–2016), empirical papers seem to increase consistently after 2003.

Empirical research about greenwashing was characterized by both qualitative and quantitative methods and by a number of different techniques. In particular, among the 60 empirical papers, 17 studies were based on a qualitative approach, 37 papers on a quantitative approach, while the remaining 10 studies employed a mixed method. Among the different methodological techniques used by greenwashing scholars, the case study method, the experimental research method, and the survey research method were the most widely employed. Figure 1 summarizes the specific techniques of the empirical studies analyzed in our review.

Methodological techniques in greenwashing empirical research

Table 2 reports the analysis of the scope of research of the 94 articles. The majority of papers (78.7%) discussed greenwashing in the fields of corporate communication, marketing, and management. It is particularly interesting to note that 12.8% of articles are focused on law and legislation.

Qualitative data analysis

To better understand how scholars have conceptualized and discussed the phenomenon so far, we also conducted a qualitative content analysis as established in CSR and business ethics research (Seele & Lock, 2015 , Lock & Seele, 2016 ). The main purpose of this analysis was to assess the core findings of empirical and conceptual research. In Table 3 , 4 , 5 , 6 , 7 and 8 we present the synthesis of our analysis. Therefore, the following tables summarize the main results of greenwashing research and offer a useful instrument for both academics and practitioners to understand what has been discovered so far, and the main trends and progresses in the fields. A more profound reflection on the findings of greenwashing literature is presented in the discussion section.

Discussion and contribution

Our content analysis resulted in the identification of three different themes highly debated in the literature: The meaning of greenwashing, its main consequences, and the recent conceptualization of CSR as a form of regulation to prevent greenwashing practices.

The meaning of greenwashing

Following Lyon and Montgomery ( 2015 ), more research is needed to acknowledge the variety of forms and mechanisms related to greenwashing to better understand its meaning. We therefore revise the different definitions presented in literature to identify its main characteristics and the underlying mechanisms of the phenomena.

As claimed by Seele and Gatti ( 2017 ), although the literature on greenwashing is expanding, there is not a universally accepted definition of the term, and the concept itself is ambiguously defined. For example, although the majority of scholars consider greenwashing as exclusively dealing with environmental issues (61.6% of the selected articles), other researchers maintain that greenwashing is also related to social issues (38.0% of articles).

Another distinction among greenwashing definitions provided in the academic literature relates to the degree of falsehood implied in the message. Some academics consider greenwashing as false advertising or misleading claims (e.g. Lane, 2010 , 2013 ; Mills, 2009 ). According to a second group of scholars, greenwashing also includes claims that are neither substantiated by a credible third-party certification nor by evidence (e.g. Alves, 2009 ; Bazillier & Vauday, 2013 ). Other researchers note that greenwashing is not typically false communication but rather it is the selective disclosure of positive information about a company’s environmental or social issues without full disclosure of negative information on these aspects (e.g. Kim & Lyon, 2011 ; Lyon & Maxwell, 2006 , 2011 ; Marquis & Toffel, 2011 ; Mitchell & Ramey, 2011 ). According to this view, greenwashing is understood as the obscuration of potentially harmful information by an organization (Mitchell & Ramey, 2011 ). Therefore, following the selective view, greenwashing is not the same as having a poor record on environmental performance because “a firm can have a poor record without presenting any positive information about itself, or can have a relatively good record while simultaneously promoting its positive actions publicly and failing to discuss its (few) negative environmental impacts” (Lyon & Maxwell, 2006 , p.3).

Linder ( 2010 ) distinguishes between two major categories of greenwashing definitions: 1) definitions focused on the attributes of the objects, and 2) definitions focused on the process behind the object. In the object attribute view, what is taken into account is the consistency between the attributes of an object and the corporate claims regarding the greenness of the object (Linder, 2010 ). Therefore, the focus is on the specific object of communication and its characteristics. According to this view greenwashing can be considered “false advertising” (Mills, 2009 ), “ads and labels that promise more environmental benefit than they deliver” (Dahl, 2010 ), “unsubstantiated or misleading claims about the environmental or social benefits of a product” (Bazillier & Vauday, 2013 ). The process attribute view focuses on the communication process. In particular, it takes into account the corporate inputs or efforts that have gone into communicating the greenness of a product, in relation to the efforts to improve the product’s actual green credentials. Examples of process attribute view definitions are the Greenpeace definition (Greenwashing as “the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service”), which is one of the most cited in literature, or the Marquis and Toffel’s definition: “Greenwashing is the practice of promoting environmentally friendly programs to deflect attention from an organization’s environmentally unfriendly or less savory activities” (Marquis & Toffel, 2011 , p.19). In relation to the process attribute view, Mitchell and Ramey ( 2011 ) specify that to be considered greenwashing, the “act” has to be deliberate, implying the intentionality of the deception (Nyilasy, Gangadharbatla, & Paladino, 2012 ).

Seele and Gatti ( 2017 ) recognize another fundamental aspect of greenwashing: it is a phenomenon in the eye of the beholder. According to the authors, regardless of the level of falsehood of corporate CSR communication, greenwashing only exists when a message is highlighted as such by NGOs, the media, or other stakeholders. Therefore, the accusation from a third party is an essential aspect of greenwashing.

Consequences of greenwashing

Our qualitative analysis of greenwashing literature has provided a summary of the main consequences of greenwashing, especially for consumers and companies. Tables 4 A and 4B in the previous chapter provide a structured and comprehensive summary of greenwashing consequences discussed in literature, expanding the analysis of Lyon and Montgomery’s article (2015) in light of new studies and research in the field. In the tables, greenwashing consequences are divided into three main groups: A) consumers, B) companies, C) other stakeholders, the environment, and the society at large. The first category presents the effects of greenwashing related to consumers’ attitudes, behaviors, and intentions. In the second group, we report internal consequences for companies engaged in greenwashing. Group three includes the more general effects of greenwashing in terms of environmental and social aspects or related to other stakeholders such as employees or stockholders.

Below we briefly discuss the main consequences identify by our analysis and reported in the tables:

First of all, the research literature agrees that the practice of greenwashing is associated with several negative effects on consumers’ attitudes, behaviors, and intentions (Table 4 A). although evoking nature may mislead consumers in their evaluation of corporate image, especially if they are not experts on CSR related issues (Parguel, Benoît-Moreau, & Larceneux, 2011 ), the wide range of greenwashing cases is causing consumers to become increasingly skeptical of corporate CSR claims (Aji & Sutikno, 2015 ; Rahman, Park, & Geng-qing Chi, 2015 ). As a consequence, superficial and sporadic CSR communication may have a negative influence on consumers’ purchase intentions, regardless of the level of corporate involvement in greenwashing practices (Rahman et al., 2015 ). This widespread skepticism, probably means that consumers perceive less greenwashing when a company communicates an economic motive than when it communicates an environmental or social motive for an investment (de Vries, Terwel, Ellemers, & Daamen, 2015 ), surprising as this may be.

In addition, greenwashing increases consumers’ confusion about corporate CSR (Furlow, 2010 ) and it seems to have a negative effect on consumers’ brand evaluation (Parguel et al., 2011 ), consumers’ opinion about corporate environmental sustainability (Mason & Mason, 2012 ), consumer green trust (Chen & Chang, 2013 ), consumer word of mouth (Chen, Lin, & Chang, 2014 ), and also on consumers’ brand attitudes (Nyilasy et al., 2012 ; Nyilasy, Gangadharbatla, & Paladino, 2014 ).

Greenwashing also seems to negatively affect the firm’s financial performance (Table 4 B). Indeed, although it may sometimes be used to successfully deflect attention away from negative CSR behavior (Du et al., 2016 ), it often seems to harm firms financially (Du, 2015 ; Walker & Wan, 2012 ), especially in the current context characterized by a high scrutiny from civil society and growing stakeholder skepticism. In particular, it negatively affects corporate legitimacy and reputation, even when corporate communication is not misleading, and the greenwashing accusation is false (Seele & Gatti, 2017 ). Indeed, corporate CSR communications may backfire on the company if the public feels that the company is engaging in self-promotion (Lyon & Montgomery, 2013 ). As a consequence, companies are now less motivated to become less environmentally harmful because it does not pay off. Therefore, following Furlow ( 2010 ), greenwashing will ultimately hurt not only consumers and companies, but also the environment.

CSR regulations to prevent greenwashing practices

Greenwashing literature recognizes the importance of NGOs and activist groups in detecting greenwashing (Bazillier & Vauday, 2013 ; Lyon & Maxwell, 2011 ; Seele & Gatti, 2017 ) but it also suggests that some firms may disclose less about their CSR because of the fear of being accused of greenwashing (Lyon & Maxwell, 2011 ). Nevertheless, scholars agree that the first condition to decrease greenwashing is through the refinement and development of a CSR regulatory system. The interesting point here is that they do not seem to embrace the mainstream view discussed in CSR literature claiming the predominance of the voluntary nature of CSR. Indeed, according to greenwashing scholars, defining and treating CSR essentially as a voluntary practice facilitates the diffusion of greenwashing. As Alves ( 2009 ) claims, “the volunteer-led CSR paradigm of the last decades has both coddled and promoted the proliferation of green spin and greenwashing.” With the exception of Mahoney, Thorne, Cecil, and LaGore ( 2013 ), who suggest that voluntary CSR reports are generally a sign of high-quality CSR and not greenwashing, all the other articles we analyzed look at the voluntary dimension of CSR, supported by the majority of CSR definitions (Dahlsrud, 2008 ), as one of the main antecedents favoring the diffusion of greenwashing.

In addition, as summarized in Table 5 , greenwashing scholars argue that “a reduction of greenwashing activities requires at least industry-wide codes of practices and, at best, regulation” (Smith & Font, 2014 ). Greenwashing literature is indeed consistent in stressing the necessity of involving regulators and policy makers for developing CSR standards and legislation. The range of scholarly suggestions covers pleas for self-regulation bodies (Kirchhoff, 2000 ) or independent auditing or rating (Huang & Chen, 2015 ; Parguel et al., 2011 ) and general demands for standards and regulations (Polonsky, Grau, & Garma, 2010 ) as well as a clear call for “federal regulations” (Feinstein, 2013 ) as the strongest form of third-party involvement. According to greenwashing scholars, this would substantially decrease greenwashing practices and would ultimately lead to a more trustworthy form of CSR.

As noted above, the perspective adopted by scholars seems not to be in line with the traditional mainstream approach of CSR research. In CSR literature, the principle of voluntarism is predominant and implies that responsible business activities are discretionary and reach beyond the rule of law. Conceptually, this principle implies that governments have a minimal role, if any, in the CSR debate (Dentchev, Balen, & Haezenck, 2015 ). However, the exclusion of mandatory aspects in the definition of CSR has recently been challenged by a number of scholars (Waagstein, 2011 ). Moreover, a growing number of governments are enacting CSR laws and regulations (e.g. Indonesia – 2007, Denmark – 2008, France – 2010, Philippines and Spain – 2011, Argentina and Brazil – 2012, India and Norway – 2013, European Union 2014), thus creating a debate as to whether the nature of CSR is exclusively voluntary or may include a mandatory dimension. Even the European Union has changed its well-known definition of CSR (“concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” Commission of the European Communities, 2001) to include a mandatory dimension, introducing the importance of policy measures and regulations to prevent unfair CSR and greenwashing behaviours.

In this debate, greenwashing scholars reflect recent perspectives on the inclusion of mandatory aspects in the CSR definition and practice (Cominetti & Seele, 2016 ; Gatti, Vishwanath, Seele, & Cottier, 2018 ; Sheehy, 2015 ; Waagstein, 2011 ; Wagner & Seele, 2017 ). Indeed, they strongly support the necessary development of mandatory elements for the establishment of a “better”, more credible CSR. In this respect, they provide a considerable contribution to the general discussion about voluntary versus mandatory CSR by explicitly addressing the consequences of a totally voluntary approach in terms of greenwashing, and, above all, by proposing and discussing specific regulatory solutions to reduce such practices.

Kirchhoff ( 2000 ), for example, tests a model for preventing greenwashing based on the introduction of a fine into the environmental labeling system. To work effectively, the model requires a third-party independent labeling authority, whose presence seems to decrease greenwashing and favor compliance to CSR standards. The introduction of an external authority to monitor CSR is also supported by Laufer ( 2003 ), who introduces the concept of tripartism, i.e. the integration of a third party into the regulatory arena, as a solution against greenwashing.

In relation to environment labeling or eco-marks, Lane ( 2010 ) offers an in-depth analysis of enforcement techniques to prevent greenwashing in eco-mark systems. Indeed, though eco-marks’ core purpose is to protect and inform consumers about the products’ green credentials, sometimes they are used by companies to mislead consumers about the environmental characteristics of a product. Following Lane ( 2010 ), public anti-greenwashing enforcement achieves better results than private eco-mark enforcement or consumers’ actions. In particular, government agency investigations and certification mark enforcement litigation seem to be the most successful mechanisms against the improper use of eco-marks.

Also claim that civil actions by consumers and investors are not enough to prevent greenwashing and that CSR related communication should be more strongly policed. Remedies under false advertising laws and under securities fraud laws should be investigated and further developed (Cherry and Sneirson, 2011 ).

In general, greenwashing scholars seem to agree that an independent environmental audit system and additional public regulation may prevent companies with poor environmental performance to engage in greenwashing (Huang & Chen, 2015 ).

Combing the voluntary and mandatory dimensions to promote CSR

Summing up the contribution of greenwashing literature to the ongoing debate about voluntary versus mandatory CSR, we can see strong support for the inclusion of mandatory aspects in the regulations of CSR.

Voluntary CSR is often considered in literature as a solution to corporate social and environmental externalities caused by globalized companies. The advent of globalization has complicated the regulation of corporate behaviors at the point that governmental regulations are no more capable of preventing several unsustainable behaviors. Not only voluntary CSR is discussed in literature as a solution to a deficit in regulation, but also it is often considered the most efficient way to address social problems. As claimed by Sheehy ( 2015 ), the voluntary dimension of CSR is motivated by the argument that “individual firms are better able to find ways to implement CSR and reduce their social costs more effectively when tailored by management to the specific industry or firm in which it is being applied” (p. 640). However, the voluntary approach is also criticized by CSR scholars for promoting free-riding behaviors and for the impossibility to sanction transgressions (O’Neill, 2007 ). Following Lock and Seele ( 2016 ), voluntary CSR may also question the transparency and credibility of CSR communication, given that companies are free to communicate what they want and how they want. A grey zone is thereby established that reinforces tendencies towards exaggeration and self-promotion, which might also include false information (Lyon & Montgomery, 2013 ; Seele & Gatti, 2017 ), and thereby enlarges the risk of reputational damage. A growing culture of self-promotion and falsehood (or the perception of such) increases the chances of the misinterpretation of CSR by consumers and other stakeholders and it increases consumer disorientation and skepticism (Furlow, 2010 ; Rahman et al., 2015 ).

It is important to note that also mandatory CSR per se may create grey zone areas where parties look for ways around the rules. For example, Wang et al. ( 2016 ) suggests that mandatory CSR may contribute to an unfair allocation of corporate CSR resources to personal projects and initiatives (with a limited social value). At an extreme case, it can “become a cover for graft and corruption by funding local political projects or organizations” (Wang et al. 2016 , p. 540).

To reduce and prevent the diffusion of greenwashing, we therefore propose, in line with greenwashing research and institutional theorists (e.g. Sheehy, 2015 ; Waagstein, 2011 ), a paradigm shift integrating both the voluntary and mandatory dimensions of CSR.

As suggested by the European Commission, in the development of CSR “public authorities should play a supporting role through a smart mix of voluntary policy measures and, where necessary, complementary regulation” (European Commission ( 2011 ) 681). The introduction of reporting and communication standards and the establishment of independent environmental audit systems, as supported by greenwashing scholars, would therefore help to reduce the grey zone creates by the predominant totally voluntary approach. Finally, a reduction in greenwashing has the potential to increase trust in corporate green behavior and help to positively impact social welfare (Lyon & Montgomery, 2015 ).

The new paradigm is based on a new CSR definition integrating both voluntary and mandatory aspects. Indeed, Sheehy ( 2015 ) claims that CSR consists of “private international law norms seeking to ameliorate and mitigate the social harms of and to promote public good by industrial organisations” (p. 639). Following the institutional framework, CSR can be therefore defined “as a form of regulation” (Sheehy, 2015 ), regardless the fact that the “regulation” is a private, self-regulated initiative, or it is publicly imposed. This means that each specific social system (characterized by specific values, norms, and regulations) is responsible for shaping a specific form of CSR, characterized by a unique combination of voluntary and mandatory aspects. Thus, there is not a priori the perfect combination of voluntary and mandatory aspects, but each context designs a specific form of CSR. In India, for example, The Indian Companies Act 2013 legally requires firms to spend a percentage of their profits on CSR activities, while in US current CSR primarily consists of private business self-regulation (Gatti et al., 2018 ).

The new conceptualization of CSR “as a form of regulation” (Sheehy, 2015 ) proposed by institutional theorists and supported by greenwashing scholars as a way to prevent greenwashing, has a number of implications. First, it implies the transition from the idea of CSR as an internal management tool toward a broader understanding of the business and society relationship (Gatti et al., 2018 ). This shift in perspective has consequences at both a practical and theoretical level. Firms should be prepared to professionalize their CSR effort beyond mere impression management, or corporate communication practices. CSR activities should be increasingly treated as legal responsibilities, not just as marketing-related projects. Professionals in the field of law should therefore collaborate with experts in public relations and communication to ensure the transition of CSR as a form of regulation.

Also on the scholarly level the CSR transition toward regulation implies a shift in the competencies of CSR scholars. While for years CSR issues have been mainly related to business ethics, management and marketing studies, we expect now that the debate would be also addressed (more) in the field of law.

As previously claimed, the introduction of standards to regulate CSR does not mean the complete negation of a voluntary dimension. As discussed by Sheehy ( 2015 ), considering CSR as a form of regulation does not merely imply a collection of mandatory rules imposed by public authorities to regulate firms’ societal and environmental harms. Indeed, it also include self-regulation. As reported by Cominetti and Seele ( 2016 ), at the moment 88.2% of CSR standards consist of soft law initiatives, that is, self-regulated standards supported by the firms themselves, as for example the United Nations (UN) Global Compact. Firms can voluntarily adopt the UN Global Compact’s principles, with the sole obligation of communicating every year their progress about human rights and environmental issues.

Conclusions

By reviewing existing greenwashing literature, this paper provides an instrument for greenwashing scholars and practitioners to better understand the main implications and characteristics of the phenomenon. Moreover, by presenting and discussing greenwashing literature, it also contributes to the refining of CSR theory by encouraging reflection on the relationship between CSR and regulation.

First, it offers a picture of the current status of research into greenwashing, showing where and how the field is evolving. In particular, our quantitative analysis shows the current flourishing of greenwashing research and the centrality of the theme within the broader CSR debate. It also reports the variety of subjects addressing the topic, the main methodological techniques applied in the field, and the principal theoretical approaches of greenwashing scholars. This analysis reveals the interdisciplinary state of the field, characterized by a mix of methods, frameworks, and approaches.

Secondly, the presentation of results and findings of greenwashing research, especially the tables provided in section 4, offers a summary that can be used by practitioners to evaluate the consequences and implications of corporate engagement in such practices. In particular, although greenwashing may sometimes be successfully used to influence consumers’ perception about the firm’s CSR and deflect attention away from negative behaviors, the risk of negative effects on consumers’ attitudes, and more generally on the firm’s performance, is increasing. This is especially true in the current context, characterized by a high level of scrutiny and skepticism. Therefore, greenwashing may finally backfire on the company and dramatically decrease its corporate reputation, leading to a reduction of corporate legitimacy resulting eventually in a legitimacy crisis.

Thirdly, the paper also contributes to the general debate about the voluntary versus mandatory nature of CSR. Greenwashing research consistently supports the inclusion of mandatory aspects in the conceptualization of CSR, which contradicts the traditional CSR paradigm exclusively based on the principle of voluntarism. Our analysis of the literature, therefore, contributes to the refinement of the theory and conceptualization of CSR because it highlights the implications and consequences of a totally voluntary approach, and strongly supports the inclusion of mandatory solutions proposed by greenwashing scholars, which would favor the implementation of a level playing field and thus, a more credible form of CSR. Understanding CSR “as a form of regulation” (Sheehy, 2015 ), may effectively increase businesses’ ability to engage in CSR and defend themselves from unwarranted attacks (Sheehy, 2015 ). Even when CSR regulation is expressed as a private industry self-regulation and not as public law, it can contribute to improving corporate practice. For example, certification (such as the GRI, SA8000, and ISO26000) (defined by the ISO organization as “the provision by an independent body of written assurance (a certificate) that the product service or system in question meets specific requirements”. [ISO organization. Retrived Jan 25 from: http://www.iso.org/iso/home/standards/certification.htm ).] is an important tool for companies to show their commitment with respect to a specific CSR standard (Knebel & Seele, 2015 ).

While it is not realistic to think that a new approach to CSR may finally eradicate all the unfair and controversial behaviors, the integration of mandatory and voluntary aspects in the field, as supported by this research, aims at establishing more favorable conditions for the diffusion of good practices and a fair and transparent CSR communication. Indeed, we believe that the inclusion of mandatory aspects in the CSR conceptualization implies a change in the practice. Practitioners in the field of marketing and public relations should prepare to professionalize CSR beyond mere impression management, in favor of a more transparent and controllable practice, subject to different forms of regulations and standards such as GRI (Wagner & Seele, 2017 ), or the EU directive on mandatory reporting (2014/95/EU), requiring companies with more than 500 employees listed on EU markets to disclose in their annual reports their progresses related to environmental and social issues. The introduction of a legal dimension in the field could in turn decrease skepticism and improve the relationship between organizations and their public. However, it requires the acceptance that the CSR debate is not only a topic in the field of management and corporate communication, but is entering new spheres related to the legal, ethical and political dimensions of business. As recently claimed by Gatti et al. ( 2018 ), “this transition asks for theory development in the direction of CSR compliance”. Indeed, especially self-regulatory standards as codes of conducts or private corporate initiatives cannot rely on public sanctions. It is therefore fundamental to identify mechanisms to promote compliance. To this regard, as discussed in the previous chapter, greenwashing scholars contribute to the debate by identify a number of mechanisms and initiatives (such as tripartism, public anti-greenwashing enforcement and certification mark infringement litigation) that decrease greenwashing and ensure a more transparent and fair CSR communication.

This study involves some limitations that open up room for future research. The major limitation is probably linked to the selection of our data set. First, the selection of relevant articles is primarily based on specific keywords (greenwash/greenwashing). One shortcoming of this method is that some relevant articles that use labels other than these keywords are not included in the dataset. In particular, new and less established terms, such as CSR washing, poorwashing, bluewashing or corporate hypocrisy (Janney & Gove, 2011 ) are slowly spreading among scholars to indicate greenwashing practices dealing with social and humanitarian issues. Another phenomenon very related to greenwashing is indicated by the term symbolic conformity (Jamali, 2010 ), also known as ceremonial conformity or decoupling of implementation from certification (Aravind & Christmann, 2011 ; Christmann & Taylor, 2006 ; Meyer & Rowan, 1977 ). The concept refers to the phenomenon of obtaining and showing standard certification without continuously complying with the requirements prescribed by the certification (Aravind & Christmann, 2011 ).

Secondly, in this study, we restricted our selection to papers that mention the search terms in the title or abstract. Although this choice was justified by the intent of identifying those articles with a clear focus on the topic, by narrowing the search in this way we may have excluded some interesting examples or discussions. To extend the analysis of greenwashing research, similar concepts and terms should, therefore, be considered in the selection of greenwashing related literature. In addition, greenwashing-related discussions presented in more general CSR and corporate communication papers should be included in the content analysis.

Future research should try to enlarge the scope of study by also including monographs or book chapters, which were not considered in this review. Additionally, by expanding the analysis to non-English research, future studies may also explore cultural differences in the interpretation and analysis of greenwashing.

In relation to future research, we also suggest maintaining the interdisciplinary character of the field, because the literature may benefit from the variety of approaches and perspectives provided by different subjects and methods and, as this review shows, it may generate original and significant contributions also to the CSR debate and, more generally, to the discussion about the relationship between business and society. Indeed, we recognize that one of the main characteristics and strengths of greenwashing research is that the issue is not limited to a specific framework or approach but is, on the contrary, addressed from different angles. For instance, while marketing scholars have studied the effects of greenwashing on consumers and companies, academics in the field of law have mainly concentrated on the relationship between regulation and CSR, providing practical solutions for reducing greenwashing, while management scholars have offered an interesting analysis of the institutional framework surrounding greenwashing phenomena, which is useful to understand the conditions and the context of greenwashing. In combination, these different contributions have offered a broad picture of the phenomenon and have allowed an understanding of its nature. We, therefore, suggest increasing the interdisciplinary dialogue that characterizes greenwashing literature in order to encourage the production of new and original insights.

Availability of data and materials

The full list of articles analyzed in this review article is available upon request from the authors.

Data retrieved from ABI/Inform database. English scholarly articles. 14-03-2019.

This search included articles published before December 31rst 2018.

For space constraints the full list is not included in the article. The full list is available upon request from the authors.

Abbreviations

Corporate social responsibility

Non-governmental organizations

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Gatti, L., Seele, P. & Rademacher, L. Grey zone in – greenwash out. A review of greenwashing research and implications for the voluntary-mandatory transition of CSR. Int J Corporate Soc Responsibility 4 , 6 (2019). https://doi.org/10.1186/s40991-019-0044-9

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Concepts and forms of greenwashing: a systematic review

Sebastião Vieira de Freitas Netto 1 ,
Marcos Felipe Falcão Sobral ORCID: orcid.org/0000-0002-4768-2622 2 ,
Ana Regina Bezerra Ribeiro 2 &
Gleibson Robert da Luz Soares 2

Environmental Sciences Europe volume 32 , Article number: 19 ( 2020 ) Cite this article

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The aggravation of environmental problems has led companies to seek the development and commercialization of green products. Some companies mislead their stakeholders through a phenomenon called greenwashing.

This paper aims to explore the phenomenon of greenwashing through a systematic literature review in search of its main concepts and typologies in the past 10 years. This research has followed the proceedings of a systematic review of the literature, based on the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA). We identified a major classification of greenwashing: firm-level executional, firm-level claim, product-level executional, and product-level claim.

It was possible to highlight and catalog the types of the phenomenon. A structure based on such type has been observed in the literature.

Since the aggravation of environmental pollution, many companies around the world have been paying more attention to environmental issues [ 20 , 41 , 53 ]. In China, environmental problems such as haze and water pollution have become increasingly prominent [ 21 ].

India is facing environmental issues such as rising air pollution, loss of food security and e-waste disposal pollution [ 16 ]. They have a 1.2 billion population and have generated 2.3 k MtCO2 emissions into the atmosphere in 2017 [ 18 ], classifying themselves as the third most polluter country only behind China and the US, long-time polluter ace.

Due to increasing of environmental problems, and consequently in public awareness, many stakeholders are more aware of environmental consideration [ 7 ]. Over the past decade, stakeholders like investors, consumers, governments, and corporate customers are increasing the pressure on companies to disclose information about their environmental performance [ 25 , 30 ] and for environmental-friendly products [ 21 ].

According to Vollero et al. [ 49 ], companies from the energy sector experiences increasing pressure from stakeholders to produce sustainable products and clean energy. Environmental awareness has grown on society [ 1 , 39 , 52 ], and especially on consumers [ 1 ], they are eager for environmental-friendly products [ 6 , 9 ].

The Nielsen Media Research [ 33 ] presented that 66% of global consumers are willing to pay more for environmentally friendly products. When these customers perceive firms as socially responsible, they may be more willing to buy the products from these firms at a higher price [ 19 , 21 ].

In order to respond to these issues, Corporate Social Responsibility (CSR) is gaining importance among business leaders [ 39 ]. CSR is defined as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” [ 13 ].

To reach the integration of social and environmental concerns in business operations companies must be sustainable and socially responsible [ 1 ], not only economically. They have to aim the three bottom lines: economic, environmental and social performance or people, planet and profit [ 12 ].

Sustainable development is defined by “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” [ 51 ]. The growing demand “drives firms to develop green marketing strategies to show consumers their good corporate image and social responsibility” ([ 53 ], p. 740).

Since reported by Delmas and Burbano [ 11 ], the green market is proliferating. Consumer, capital markets, products, services, and firms have been expanding. As there is an increase in green markets, it is followed by the phenomenon of greenwashing [ 28 ]. The phenomenon is defined as “the intersection of two firm behaviours: poor environmental performance and positive communication about environmental performance” ([ 11 ], p. 65).

There are many different definitions of greenwashing, in various perspectives. This review attends to search the recent literature to identify the different definitions of greenwashing and its forms. The primary purpose of this article is to analyze the different typologies and characteristics of greenwashing. In order to achieve the objective, we sought to systematically review the last 10 years in the literature. A systematic literature review has been conducted in search of the phenomenon definitions and related concepts; and its characteristics and typologies.

Stakeholders and society in general, demands transparency in disclosing information about the environmental impact of companies activities, this communication must be dynamic, through different channels and with the purpose of educating awareness [ 1 ]. The Federal Trade Commission ([ 14 ], p. 62122) instructs to “use clear and prominent qualifying language to convey that a general environmental claim refers only to a specific and limited environmental benefit(s)”.

The advent of Web 2.0 brings new social media tools, and stakeholders can exercise new forms of interacting and sharing information through the Internet. Online corporate pages or blogs, wiki and petitions websites, and particularly social networks like Twitter and Facebook are redefining the interactions and communications between companies and their stakeholders [ 17 ].

Some companies invest in green marketing communications, to be perceived as eco-friendly and socially engaged. They advertise and CSR to achieve better purchase intentions and brand attitudes [ 34 ]. However, the reality behind corporate environmentalism can be disappointing, TerraChoice [ 48 ] reported that 95% of products claiming to be green in Canada and the USA committed at least one of the “sins of greenwashing”, from the sin of the hidden trade-off to the sin of worshiping false labels.

Greenwashing was first accused in 1986 by activist Jay Westerveld, when hotels begin asking guests to reuse towels, claiming that it was a company water conservation strategy, although, did not have any environmental actions with more significant environmental impact issues [ 38 ].

According to advertising firm Ogilvy and Mather, greenwashing practices are growing in the last decades to epidemic proportions [ 24 ]. With the increase of green markets, followed by greenwashing, a trust problem has emerged since customers have difficulties in identifying a true green claim [ 34 ].

Green skepticism has grown with greenwashing, and it would obstruct green marketing [ 8 ]. Real green claims would suffer from greater skepticism since it is hard for customers to differentiate the reliability of green marketing initiatives. TerraChoice [ 48 ] has released a study to help customers identify greenwashing practices by companies with the seven sins of greenwashing.

In developed countries that have more significant environmental awareness, the regulation from the authorities is in a higher level of development compared to developing countries, in the US regulation of greenwashing is extremely limited with uncertain regulation enforcement [ 11 ]. In response to such non-binding regulatory guidelines, scholars, activists and environmentalists have argued that it inadequately protects consumers from the harmful effects of the phenomenon of greenwashing [ 15 ].

There are none or poor green regulation in developing countries governments even though the mass population does have any or poor concerns about environmental care. The practice of recycling by waste sorting and collection that seems to be a regular thing to do by the millennials in developed countries [ 35 ], on the other side in emerging countries, it is a privilege to have it.

This paper is structured as follows, in Methods we describe the methodological procedures, research questions, and search strategy. The next topic was presented the results followed by the discussion. The last topic is the conclusions.

This research has followed the proceedings of a systematic review of the literature, based on the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA). PRISMA is not a quality assessment mechanism, although it may be useful for critical appraisal by reviewers and editors. Its objective is to help authors to improve the reporting of systematic reviews and meta-analyses [ 40 ].

A protocol has been developed to specify the carefully planning proceedings and eligibility criteria, to select and identify the data of documents. According to Shamseer et al. [ 44 ], a protocol is an essential component of a systematic review, in the protocol are specified the pre-defined eligibility criteria and methodological approach, which ensures the consistency by the review team, accountability, research integrity and transparency.

Research questions

RQ 1: Which are the main definitions of Greenwashing and their evolution over the past 10 years?

RQ 2: Which are the characteristics and forms of Greenwashing?

Search strategy

All content and papers selected for each phase of the review were available for all the researchers in the cloud, the data sheets were created using a document cloud base application that enables collaboration from different persons remotely located. This strategy enabled better control and enhanced standardization of the process of the systematic review.

With the purpose of identifying and recovering the smallest possible number of publications, the research incorporates a search strategy. The resources used to searches are Web of Science ( http://www.webofscience.com ); and Scopus ( http://www.scopus.com ).

Scopus search engine offers a better tool in terms of detailed string than Web of Science. The search string from Scopus can be developed with a much-specified search query. When the search strings were applied, 84 publications were identified from Scopus and 179 from Web of Science, representing a total of 263 publications considering both engines.

The keywords applied in the search engines were: “greenwashing”, “greenwash” and “greenwasher”. Table 1 shows the specific search filters used on both Scopus and Web of Science databases.

Data selection

The data selection was performed in two steps: the first stage involved a Title and Abstract analyses; and the second stage involved an Introduction and Conclusion analyses.

In the first stage, an initial selection was performed on documents that reasonably satisfied the selection criteria based on the titles and abstracts reading. The process was handled in pairs to reduce possible bias and the researchers worked individually on the inclusion or exclusion of the documents and then compared the spreadsheets. When a divergence occurred and a consensus was not possible a third researcher was consulted. If the divergence still remained, the document was included in the list.

In the second stage, the selection was performed on documents that fairly satisfied selection criteria based on the introductions and conclusions reading. Similar to the first stage, the process was also managed in pairs with the same strategy in case of divergencies described in the first stage.

Data extraction and quality assessment

In the extraction stage, all the selected documents were assessed concerning the methodological quality, yet the results were not used to limit the selection.

We extracted 263 articles from Scopus and Web of Science, which eliminated all those present in both bases. Then, the title and abstract were read, resulting in 149 articles. Finally, the introduction and conclusion were read, leaving 67 documents. After the complete reading, 42 articles completely met the review protocol as presented in Fig. 1 .

Results achieved on each stage at the systematic review process

Table 2 reports the publication names of the journals that were included in the review. The journal that published most of the studies is “Journal of Business Ethics”, followed by “BioTechnology: An Indian Journal”, “Journal of Advertising”, “Journal of Business and Technical Communication”, and “Journal of Cleaner Production”.

The 67 documents included in the review were published in 50 different journals. There is a strong presence of publications from “Journal of Business Ethics” with 11 selected documents. This journal is devoted to a wide variety of methodological and disciplinary perspectives related to ethical issues in business.

There is a majority of Business and Management journals related to Environment and Sustainability issues in the selected papers. Others journals brought the greenwashing phenomenon in the fields of Advertising and Communications, Economics, Sociology and Ethics, Production Engineering, Marketing, Accounting, Tourism, Education and others. These results show the multidisciplinary characteristic of the phenomenon.

The selection included only papers in the period of 2009–2018, but no documents from 2009 and 2010 were included in this research. Observing Fig. 2 there is a relevant increase in the number of studies over time, with a peak in 2017. This trend suggests that there is an increasing interest for the phenomenon of greenwashing in the literature.

Evolution of the number of reviewed documents over time

Due to the objective of this paper, documents included in the review have been examined with precise attention to two main topics: definitions of greenwashing and related concepts; and the phenomenon characteristics and typology. 67 documents provided insights on definitions of greenwashing and related concepts. From the 67 selected documents, 17 also provided insights on the phenomenon characteristics and typology.

The term Greenwashing was coined first in 1986, by an environmentalist Jay Westervelt. He published an essay on the hospitality industry about their practices to promote towel reuse [ 20 , 52 ].

Several dictionaries define the phenomenon of greenwashing, Webster’s New Millennium Dictionary of English [ 31 ] defines greenwash as “practice of promoting environmentally friendly programs to deflect attention from an organization’s environmentally unfriendly or less savoury activities”. In 1999 the term was added to the Concise Oxford English Dictionary [ 36 ], that defines it as: “Disinformation disseminated by an organization so as to present an environmentally responsible public image; a public image of environmental responsibility promulgated by or for an organization, etc., but perceived as being unfounded or intentionally misleading”.

According to Lyon and Montgomery [ 27 ], there is no rigid definition of greenwashing due to its multifaceted nature. Above we describe the different main approaches we found in defining the phenomenon of greenwashing.

Greenwashing as selective disclosure

TerraChoice [ 48 ] defines greenwashing as “the act of misleading consumers regarding the environmental practices of a company or the environmental performance and positive communication about environmental performance”.

Delmas and Burbano ([ 11 ], p. 67) define as “poor environmental performance and positive communication about environmental performance”. Baum ([ 2 ], p. 424) considers greenwashing “the act of disseminating disinformation to consumers regarding the environmental practices of a company or the environmental benefits of a product or service”.

Tateishi ([ 47 ], p. 3) summarizes greenwashing as “communication that misleads people regarding environmental performance/benefits by disclosing negative information and disseminating positive information about an organization, service, or product”.

All of these authors describe the phenomenon as two main behaviors simultaneously: retain the disclosure of negative information related to the company’s environmental performance and expose positive information regarding its environmental performance. This two-folded behavior can be named as selective disclosure.

We found several articles considering greenwashing a type of selective disclosure. Lyon and Maxwell [ 26 ] presented the first economic analysis of greenwash, with specific persuasion game approach from Milgrom and Roberts [ 32 ]. Lyon and Maxwell ([ 26 ], p. 9) consider selective disclosure a form of greenwashing and define the phenomenon as “selective disclosure of positive information about a company’s environmental or social performance, without full disclosure of negative information on these dimensions, so as to create an overly positive corporate image”.

Lyon and Maxwell [ 26 ] assume social and environmental dimensions on their work, others consider only the environmental dimension, considering the social dimension a different phenomenon.

Marquis et al. ([ 30 ], p. 483) define selective disclosure as “a symbolic strategy whereby firms seek to gain or maintain legitimacy by disproportionately revealing beneficial or relatively benign performance indicators to obscure their less impressive overall performance”.

Greenwashing as decoupling

Some authors associate greenwashing to a decoupling behavior. Siano et al. ([ 45 ], p. 27) relate greenwashing with symbolic actions, “which tend to deflect attention to minor issues or lead to create ‘green talk’ through statements aimed at satisfying stakeholder requirements in terms of sustainability but without any concrete action”.

Walker and Wan [ 50 ] defines greenwashing as the gap between “symbolic” and “substantive” corporate social actions (CSA). Companies that have a negative CSR performance and at the same time apply a positive communication about their CSR performance.

As defined by Guo et al. ([ 22 ], p. 1828) greenwashing is essentially decoupling behaviours that are symbolic environmental protection behaviours with no environmental protection behaviour or failure to fulfil environmental protection commitments, to alleviate the external public pressures and uncertainties and to avoid the conflict with external constituents. The authors reinforce that these decoupling behaviors of greenwashing brands are to maintain corporate legitimacy.

Signaling and corporate legitimacy theory

The phenomenon of greenwashing was also related to corporate legitimacy theory in the literature. It can be distinguished in three types of corporate legitimacy: cognitive legitimacy, pragmatic legitimacy and moral legitimacy. According to Seele and Gatti [ 43 ], greenwashing occurs in the light of pragmatic legitimacy.

“Cognitive legitimacy is based on the shared taken-for-granted assumptions of an organization’s societal environment. Moral legitimacy relies on moral judgments about the organization and its behaviour…“ ([ 43 ], p. 242). And pragmatic legitimacy is “the result of self-interested calculations of the organization’s key stakeholders, and it is based on stakeholder’s perceptions of their personal benefit deriving from corporate activities and communication.” ([ 43 ], p. 242).

Guo et al. [ 22 ] explain that when companies fail to reach their green goals, the decoupling behaviors can reduce cognitive legitimacy (take-for grandness of constituents), moral legitimacy (positive green evaluation), and pragmatic legitimacy (benefiting constituents).

Which are the characteristics and forms of greenwashing?

According to Delmas and Burbano [ 11 ] greenwashing is the act of misleading consumers regarding the environmental practices of an organization (firm-level) or the environmental benefits of a product or service (product/service-level). An example of firm-level greenwashing is the “Ecomagination” campaign from General Electric which advertised the organization’s environmental practices while at the same time lobbied to fight new clean air EPA requirements [ 11 ]. An example of product/service-level greenwashing is the Energy Star mis-certified refrigerators from LG, an eco-label of energy efficiency, which was found that 10 models of LG’s refrigerators were not energy efficient to be certified [ 11 ].

We found two different major classifications of greenwashing: Claim greenwashing and Executional greenwashing. The studies on the literature concentrate on product/service-level claim greenwashing, while executional greenwashing was found only on two articles in this revision. Figure 3 shows the main classifications in the phenomenon of greenwashing.

Major classifications of greenwashing

Claim greenwashing

The majority of research to date has focused on product/service-level claim greenwashing, which uses textual arguments that explicitly or implicitly refer to the ecological benefits of a product or service to create a misleading environmental claim.

Parguel et al. [ 37 ], cited a study from 1991 in which Kangun, Carlson and Grove distinguished three categories of greenwashed advertising: (1) those employing false claims; (2) those omitting important information that could help evaluate the claim sincerity, and (3) those employing vague or ambiguous term, which could be summed up as lying, lying by omission or lying through lack of clarity.

From Tateishi [ 47 ] and Baum [ 2 ] we found cited a study conducted by Carlson et al. [ 5 ] that developed two typologies of green claims: (1) claim type; and (2) claim deceptiveness. Claim type involves five typological categories: (a) product orientation—claims centring on the ecological attribute of a product; (b) process orientation—claims centring on the ecological high performance of a production process technique, and/or an ecological disposal method; (c) image orientation—claims centring on enhancing the eco-friendly image of an organization, like claims that associates an organization with an environmental cause or activity which there is elevated public support; (d) environmental fact—claims that involves an independent statement that is ostensibly factual in nature from an organization about the environment at large, or its condition; and (e) combination—claims having two or more of the categories above [ 2 , 47 ]. The types of claims are presented in Fig. 4 .

Types of claims [ 5 ]

These claim types presented above can be classified in a second typology, claim deceptiveness, that also involves five typological categories: (a) vague/ambiguous—claims that are overly vague, ambiguous, too broad, and/or lacking a clear definition; (b) omission—claims missing the necessary information to evaluate its validity; (c) false/outright lie—claims that are inaccurate or a fabrication; (d) combination—claims having two or more of the categories above; and (e) acceptable—claims that do not contain a deceptive feature [ 47 ]. The claims are presented in Fig. 5 .

Claim deceptiveness [ 5 ]

An environmental marketing firm called TerraChoice [ 48 ] has created a classification called “the seven sins of greenwashing”. The classification has been cited in several articles, Scanlan [ 42 ] cited that it includes various fibs, half-truths, vagueness and other forms of trickery. Markham et al. [ 29 ] described that the seven sins assist more precisely in detecting instances of firm-based or product-based greenwashing.

Baum [ 2 ] cited that the seven sins of greenwashing can indicate the main ways in which a company can mislead consumers with environmental claims and uses these seven sins as a framework for their advertising analysis. According to Antunes et al. [ 1 ], the objective of the seven sins is to discourage companies to apply these green marketing strategies by giving the consumers information they need to be cautious in their purchase decisions.

Delmas and Burbano [ 11 ] explain that the TerraChoice Group’s seven sins are all product-level greenwashing. We have found quotes on 10 articles outlining the seven sins of greenwashing that are described below [ 48 ]:

The sin of the hidden trade-off: a claim suggesting that a product is ‘green’ based on a narrow set of attributes without attention to other important environmental issues. Paper, for example, is not necessarily environmentally preferable just because it comes from a sustainably harvested forest. Other important environmental issues in the paper-making process, such as greenhouse gas emissions, or chlorine use in bleaching may be equally important [ 48 ]. Other examples are energy, utilities and gasoline corporations that advertise about the benefits of new sources of energy while some are drilling into unexplored areas to source oil and thus destroying natural habitats and losing biodiversity, disguising the imbued hidden tradeoff [ 2 ].

The sin of no proof: an environmental claim that cannot be substantiated by easily accessible supporting information or by a reliable third-party certification. Common examples are facial tissues or toilet tissue products that claim various percentages of post-consumer recycled content without providing evidence [ 48 ]. In short terms, if a corporation makes a claim that includes some kind of percentage or statistics info that are not verified with something that could prove it, like a fine-print text or a URL to lead to more information, the claim is considered as no proof [ 2 ].

The sin of vagueness: a claim that is poorly defined or too broad, a claim lacking in specifics that its real meaning is inclined to be misunderstood by the consumer. ‘All-natural’ is an example of this sin. Arsenic, uranium, mercury, and formaldehyde are all naturally occurring, and poisonous. ‘All natural’ isn’t necessarily ‘green’ [ 48 ]. Other examples are “Non-toxic” because everything is toxic in certain dosages; “Green”, “Environmentally friendly”, “Eco-friendly”, and “Eco-conscious” are also vague because without elaboration they are meaningless [ 2 ].

The sin of worshipping false labels: a product that, through a false suggestion or certification-like image, mislead consumers into thinking that it has been through a legitimate green certification process. An example is a paper towel whose packaging has a certification-like image that makes a claim that the product “fights global warming” [ 48 ]. Other examples include green jargon such as “eco-safe” and “eco-preferred” [ 2 ].

The sin of irrelevance: an environmental claim that may be truthful but is unimportant or unhelpful for consumers seeking environmentally preferable products. ‘CFC-free’ is a common example, since it is a frequent claim despite the fact that CFCs are banned by law [ 48 ].

The sin of lesser of two evils: a claim that may be true within the product category, but that risks distracting the consumer from the greater environmental impacts of the category as a whole. Organic cigarettes could be an example of this Sin, as might the fuel-efficient sport-utility vehicle [ 48 ].

The sin of fibbing: environmental claims that are simply false. The most common examples were products falsely claiming to be Energy Star certified or registered [ 48 ].

Scanlan [ 42 ] conducted a research in the oil gas industry (OGI) communication on hydraulic fracking and proposed new sins related to the conceptualization of greenwashing. The OGI masks harm done and other risks with greenwashing in the form of new sins he elaborated build on TerraChoice [ 48 ]: (8) false hopes; (9) fearmongering; (10) broken promises; (11) injustice; (12) hazardous consequences; and (13) profits over people and the environment [ 42 ].

The sin of false hopes: a claim that reinforces a false hope. The OGI hydraulic fracking method has an enormous negative impact on the environment, critics argue that ecological modernization is not possible and believing otherwise is harmful to the environment [ 42 ].

The sin of fearmongering: claims that fabricate insecurity related to not “buying in” on an organization practice, like OGI hydraulic fracking [ 42 ]. Scanlan ([ 42 ], p. 16) explains that “shifting the scale of fear and seizing opportunities from instability and uncertainty borne out of wars in Afghanistan and Iraq, the global war on terror, and volatile fuel costs, alter the public perception of risk”.

The sin of broken promises: claims promising that fracking will lift up poor, rural communities with riches from mineral rights and economic development, but when evidence shows the contrary, communities are left with irreversible impacts ([ 46 ] apud [ 42 ]). Scanlan [ 42 ] describes that greenwashing obscures who loses regarding the negative impacts of fracking and OGI profits from exploiting the hopes and trust of the citizenry.

The sin of injustice: according to Scanlan [ 42 ] the environmental communication examined in his research does not speak directly to communities most affected by fracking, it focuses on a segment of the population that benefits from fracking but do not suffer its consequences.

The sin of hazardous consequences: greenwashing hides the reality of inequality and distracts the public from the dangers of risk other experience, Scanlan [ 42 ] includes another sin in reference to harm done from hazardous consequences.

The sin of profits over people and the environment: to profit over people and the environment is what Scanlan [ 42 ] describes as potentially the greatest greenwashing sin of all.

“The delivery of false hopes and resulting broken promises, fearmongering that reorients public understanding of risk and the hazardous consequences of fracking, environmental injustice, and the pursuit of profits over people and the environment have serious impacts on the planet” ([ 42 ], p. 20).

Contreras-Pacheco and Claasen [ 10 ] brought five firm-level greenwashing: (1) dirty business; (2) ad bluster; (3) political spin; (4) it is the law, stupid! [ 4 ]. Fifth firm-level greenwashing form: (5) fuzzy reporting [ 3 ].

Dirty business: belonging to an inherently unsustainable business, but promoting sustainable practices or products that are not representative either for the business or the society.

Ad bluster: diverting attention from sustainable issues, through the use of advertising. It is used to exaggerate achievements or present alternative programs that are not related to the main sustainability concern.

Political spin: influencing regulations or governments in order to obtain benefits that affect sustainability. It is common to notice that these spins are “justified” due to companies character of large taxpayers or employers.

It’s the law, stupid!: proclaiming sustainability accomplishments or commitments that are already required by existing laws or regulations.

Fuzzy reporting: taking advantage of sustainability reports and their nature of one-way communication channel, in order to twist the truth or project a positive image in terms of CSR corporate practices.

Executional greenwashing

Parguel et al. [ 37 ] described a new form of greenwashing that the authors called ‘Executional Greenwashing’. This strategy of greenwashing does not use any type of claim that was described before, but it suggests nature-evoking elements such as images using colors (e.g., green, blue) or sounds (e.g., sea, birds). Backgrounds representing natural landscapes (e.g., mountains, forests, oceans) or pictures of endangered animal species (e.g., pandas, dolphins) or renewable sources of energy (e.g., wind, waterfalls) are examples of executional nature-evoking elements [ 37 ]. The research addressed to this gap in the literature by documenting the executional greenwashing effect based on advertising execution knowledge.

These nature-evoking elements, intentionally or not, may induce false perceptions of the brand’s greenness. According to Hartmann and Apaolaza-Ibáñez ([ 23 ], apud Parguel et al. [ 37 ], p. 2) these elements can “trigger ecological inferences subtly by activating implicit references to nature through nature imagery”.

Parguel et al. [ 37 ] conducted a research that presented empirical evidence of the misleading effect of these nature-evoking elements named ‘executional greenwashing effect’ and moderator factors that may reduce its impact. The research consisted of a web survey considering two types of consumers: (a) non-expert consumers and (b) expert consumers.

The empirical results showed that the presence of advertising executional elements evoking-nature only generates higher perceptions of the brand’s greenness among non-expert consumers, expert consumers were not significantly affected.

In this paper, we have discussed the main concepts of greenwashing and its main types that we found present in the literature. Due to its multidisciplinary characteristic, no general definition of greenwashing is accepted to recent day. The phenomenon has been discussed by researchers from several areas such as Business, Communication, Economy, Production Engineering, Social Sciences, Environmental Management and Law.

Some scholars consider only environmental issues when talking about greenwashing, distinguishing it with the term bluewashing, which stands for social issues. Others researchers do not distinguish and consider greenwashing a social and environmental phenomenon.

We can see that greenwashing can be perceived and accused by the observer in several different ways. From product-level claims with environmental labeling to firm-level nature-evoked executional elements in sustainability reports, the phenomenon may be classified in a complex variety of options.

This multifaceted amount of forms in which greenwashing has been observed offers difficulty for consumers to identify the phenomenon manifestations. Even among consumers considered expert consumers, well informed about greenwashing and the market in question, it is a challenge to identify greenwashing. In consumers considered regular, who do not know or have limited information about the phenomenon, the accusation process is even more complicated.

The main definitions of greenwashing were explored in the literature. Most researchers are based on the definitions of the Oxford English Dictionary [ 36 ] and TerraChoice [ 48 ]. In these definitions, the phenomenon is seen as a deliberate corporate action with the presence of misleading elements, focused on the deception of stakeholders.

As greenwashing was first accused in 1986 by Jay Westerveld [ 38 ], an activist who noticed an organizational communication with a misleading trait, the element of accusation is key in the process. Seele and Gatti [ 43 ] were the only researchers who observed the phenomenon by adding the accusation as a key element in the process, a charge or claim from a third party that someone has done something illegal or wrong. Without the accusation element, the definition of the phenomenon is incomplete.

Aiming to reach the first objective, this review exposed the main definitions of greenwashing present in the literature. These definitions were presented in different conceptual perspectives, due to the multidisciplinary characteristic of the object of study. A limitation of the work found in its development was the keywords used in the search strings. Terms like ‘CSR-Wash’, ‘Decoupling’ and ‘Selective Disclosure’ may contribute to the number of articles selected in the systematic review.

To achieve the second objective, a categorization of the phenomenon was developed. This classification of greenwashing is the main academic contribution of the study, which can provide a theoretical basis for the accusatory element of the phenomenon.

In this emerging and growing green market, there are also organizations that are really green, the developed classification of greenwashing can also help to avoid unsubstantiated accusations and protect these genuine green companies.

For future research, we recommend developing procedures to measure the greenwashing in companies. The multicriteria modeling may be adequate by addressing the sorting or portfolio approach.

Availability of data and materials

Not applicable.

Abbreviations

Preferred Reporting Items for Systematic Reviews and Meta-Analyses

United States of America

Web of Science Database

Corporate social actions

Corporate social responsibility

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This study was financed in part by the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior—Brazil (CAPES).

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de Freitas Netto, S.V., Sobral, M.F.F., Ribeiro, A.R.B. et al. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32 , 19 (2020). https://doi.org/10.1186/s12302-020-0300-3

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Green marketing
Greenwashing
Systematic review

A bibliometric analysis of greenwashing research: a closer look at agriculture, food industry and food retail

British Food Journal

ISSN : 0007-070X

Article publication date: 19 November 2021

Issue publication date: 17 December 2021

This paper aims at providing an overview and synthesis of the existing body of knowledge about greenwashing. Special attention is paid to the articles directly linked with agriculture, food industry and food retail.

Design/methodology/approach

A bibliometric analysis was performed over 351 documents extracted from the WoS database, using SciMAT and VOSviewer software programs.

Three periods in the academic literature about greenwashing can be distinguished: ground-setting (2003–2010), trail-blazing (2011–2015) and remarkable growth (2016–2020). Along this evolution, a body of knowledge which stemmed from the literature about CSR has achieved a major development, deploying different research lines such as stakeholders' management, marketing and communication and audit. A specific analysis of the academic literature about greenwashing in agriculture, food industry and food retail has been carried out, showing a need for further development.

Social implications

The development of scientific knowledge about greenwashing puts this social claim on the spotlight of business management studies, helping to fight greenwashing and, this way, to reduce the environmental impact of corporate activities. Studying greenwashing will help to reduce its frequency and, therefore, heal the planet.

Originality/value

Some previous studies have provided systematic reviews of the literature using different approaches, but they did not untangle the intellectual structure and the evolution of the body of research about greenwashing. This article originally provides a thorough analysis of these aspects, as well as a closer look at the impact of greenwashing practices in the academic literature regarding agriculture, food industry and food retail.

Greenwashing
Greenhushing
Agriculture
Food industry
Food retail
Bibliometric analysis
Co-word analysis

Montero-Navarro, A. , González-Torres, T. , Rodríguez-Sánchez, J.-L. and Gallego-Losada, R. (2021), "A bibliometric analysis of greenwashing research: a closer look at agriculture, food industry and food retail", British Food Journal , Vol. 123 No. 13, pp. 547-560. https://doi.org/10.1108/BFJ-06-2021-0708

Emerald Publishing Limited

Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

1. Introduction

The once traditional sole focus on the financial performance of the organizations is no longer a reality. Nowadays, companies have to deal with the aspirations of many stakeholders, groups which demand a sufficient degree of satisfaction of their goals and interests. Stakeholders like consumers, investors, governments and the society as a whole are increasingly requiring responsible behaviors from companies, as well as demanding transparency in the information about their environmental performance ( Chen and Chang, 2013 ; Marquis et al. , 2016 ). Consequently, green markets —products, services, investment opportunities and firms— and responsible disclosure of business information have been expanding rapidly in the last years ( Delmas and Burbano, 2011 ).

The main goal of a responsible disclosure of business information is to communicate the sustainable practices of a firm to its stakeholders, in order to improve its corporate reputation and, thus, influence the stakeholder's behavior towards the company and its products or services. The expected outcomes of these practices are improved financial performance and increased societal gain derived from a change of behavior ( Font et al. , 2017 ).

It is in this context that the phenomenon of greenwashing arises. Considering the potential benefits of having an environmentally concerned image, sustainability communication not accompanied by real practices is becoming increasingly frequent ( Lyon and Maxwell, 2011 ). Starting from the initial formulation of Jay Westervelt in 1986, the term greenwashing has become a standard to describe this kind of practices. There are many definitions of the term, such as the one provided by Tateishi (2017) , who affirms that it is a type of “communication that misleads people regarding environmental performance/benefits by disclosing negative information and disseminating positive information about an organization, service, or product”.

Along with the social concern about this practice, the academia is paying a growing attention to it, as it raises challenging research opportunities for many academic disciplines ( Lyon and Montgomery, 2015 ).The number of scholarly articles mentioning greenwashing has increased sharply in the last decades, remarkably since 2016. Given the environmental impact of food related activities, greenwashing is also a relevant concern for those who study the policies, actions and behaviors of the main agents involved along the food supply chain ( Alons, 2017 ; DeFries et al. , 2017 ; Guyader et al. , 2017 ).

This article aims at providing an overview and synthesis of research on the notion and practices of greenwashing. This general objective is broken down into the following specific objectives: (1) to assess the academic productivity through the historical evolution of publications; (2) to determine the intellectual structure of the research topic; (3) to uncover the thematic organization of the research topic; and (4) to identify the conceptual structure of the research topic. Along with them, an additional goal would be (5) to analyze the specific research trends concerning greenwashing in agriculture, food industry and food retail.

Which is the historical evolution of the literature about greenwashing?

Which are the main documents that have influenced the intellectual structure of the topic?

Which are the main journals around which the research topic is organized?

Which are the patterns and hot topics in the field of greenwashing?

Which are the main concerns boarded by the researchers about greenwashing in agriculture, food industry and food retail?

This article provides academics with an overview of the current situation and trends of this research body. The results of this study are especially relevant considering the importance of the topic of greenwashing and the emphasis of society and institutions in developing a sustainable growth.

2. Methodology

In order to answer these research questions and achieve the objectives, this article uses a bibliometric methodological approach, following other relevant works. Bibliometric analysis provides the researchers with different tools that help them to assess the academic productivity, its impact and its relative influence; to establish the intellectual structure of the research topic as well as its evolution; and to identify the different subtopics and its conceptual structure ( Gomezelj, 2016 ; Marasco et al. , 2018 ).

The information search strategy has been based on the bibliographic database Web of Science (WoS), one of the most prestigious in the field of social sciences and frequently used for bibliometric studies in management and organization fields. In order to avoid the researchers' subjectivity in data collection, a keyword search has been carried out. The search terms selected were “greenwashing”, “greenwash” and “greenhushing”. The research included articles, proceedings papers, book chapters and reviews published in peer-reviewed journals included in the database from January 1990 to December 2020.

The number of documents obtained is 360. All the results have been double-checked by the authors in order to eliminate duplicates and confirming that they fit the object of the study. From this screening, a total of 351 articles were chosen.

Initially, SciMAT software ( Cobo et al. , 2012 ) has been used in order to deliver productivity measures about the research field, considering the historical evolution of the publications ( RQ1 ), the most influential ones ( RQ2 ) and the main journals where they have been published ( RQ3 ). The article also includes relational techniques through a bibliometric mapping approach using the VOSviewer software in order to determine the evolution of the intellectual structure of the field of knowledge ( RQ4 ). This software “pays special attention to the graphical representation of bibliometric maps. The functionality of VOSviewer is especially useful for displaying large bibliometric maps in an easy-to-interpret way” ( Van Eck and Waltman, 2010 , p. 523).

Finally, a specific literature review of 19 articles directly related with greenwashing in agriculture, food industry or food retail has been carried out ( RQ5 ). This selection was carried out by the authors, using a double-check process, after reading the abstract and, when needed, the entire content of each of the 351 papers included in the bibliometric analysis.

3. Results and discussion

3.1 productivity measures.

Figure 1 shows the growth of the number of academic articles per year in the field of greenwashing. The first publication ( Mulligan, 1999 ) appeared in the Institute Development Studies Bulletin.

When analyzing the number of publications per year, a growth trend can be clearly recognized. We can identify three stages in the development of the academic literature about greenwashing: ground-setting (1999–2010); trail-blazing (2011–2015); and remarkable growth (2016–2020).

The growing environmental awareness of our society has increased academics' interest in the phenomenon of greenwashing as an instrument used by practitioners to improve their strategic positions ( Antunes et al. , 2015 ; Wolniak and Hąbek, 2015 ). Specially, the years after 2015 have meant a clear burst in the publication of fresh academic literature, roughly accumulating two-thirds (63.3%) of the 351 documents. Consequently, it could be said that research in the field of greenwashing is a hot topic that is gaining importance in the recent years.

As can be seen in Table 1 , a 28.5% of the authors are linked with US universities, while some other countries, such as the UK, China, Canada and Germany are also importantly represented. Amongst the top 10 countries we can distinguish two North American ones (US and Canada), some of the main European economies (the UK, Germany, France and Italy), two industrial powers (China and Brazil) and Australia, due to the importance of its natural resources.

Table 1 also shows the most productive journals and the main interest areas to which these publications are related. In total, 8 journals (3.3%) gathered 74 articles, which means a 21.1%, resulting in a relatively high degree of concentration of the publications.

The Journal of Business Ethics leads clearly the list, where we can find journals looking at greenwashing from different points of view: management, mainly influenced by a stakeholders' approach; communication and consumer perceptions; accountability and audit, linked with the disclosure of financial and ecological performance information made by the organizations; and ecology and sustainability. Some of these sources belong, in fact, to two different areas of concern, being placed in the intersection between business economics and environmental sciences, which can be a proof of a claim for a new and more sustainable way of management.

The 351 articles were written by 808 different authors. The vast majority of them (92.6%; n = 748/808) took part in just one publication; 6.1% of the authors ( n = 49/808) published two ones; and 1.4% ( n = 11/808) are credited in three or more publications. Table 2 displays the most productive ones, with three or more articles published in this research field.

The relative youth of the academic concern about greenwashing, along with the diversity of perspectives and the alignment with different concerns (management, marketing, production, public policies and environment), has resulted in the existence of many research teams, which are developing their work in different lines. The most prolific authors are Lyon, especially concerned with the information disclosure made by corporations; Chen, mainly focused on the perceptions of the consumers; Testa, who is especially concerned about the role of the stakeholders of a firm; Font, whose works are associated with sustainable tourism; and Siano and Vollero, focused on the communication of CSR actions.

Table 3 shows the articles with the highest number of citations in absolute terms (>100) ordered by citations per year (C/Y). The only repeated source in the top 10 places is the Journal of Business Ethics, showing again its referential role in this academic field.

The most cited paper in relative terms ( Delmas and Burbano, 2011 ), gathering the ideas of the previous literature, classifies the drivers of greenwashing into three different groups (external, organizational and individual), generating a framework which has been the basis of many later studies. The most cited paper in absolute terms (457 cites) is the work of Laufer (2003) , which states that the problems faced by firms when developing accurate responsible information are the same ones that they have to face when trying to accomplish the law.

Dealing with agriculture, food industry and food retail, Sirieux et al. (2013) , the most cited work about greenwashing related with food retail, positioned in the 12th place of citations, study the perception of the consumers about sustainable food labels compared and combined with other different kinds of labels (such as nutritional facts …).

3.2 Relational techniques: co-word analysis

Relational techniques, such as co-word analysis, are used to identify patterns and detect hot topics inside a research field. Co-word analysis provides an insight into the main themes and research trends, studying the most frequent keywords. “When words frequently co-occur in documents, it means that the concepts behind those words are closely related. It is the only method that uses the actual content of the documents to construct a similarity measure” ( Zupic and Čater, 2015 , p. 6).

As it was previously stated, we can identify three stages in the development of the literature: 1999–2010 (ground-setting); 2011–2015 (trail-blazing) and 2016–2020 (remarkable growth). In order to provide a detailed overview about the evolution of the topics, three co-word analyses were conducted.

In total, 32 articles related with greenwashing were published in the ground-setting period (1999–2010). These papers include a total of 111 keywords. In order to represent the knowledge structure, the map shown by Figure 2 considers the terms present in at least 2 publications. In this period, greenwashing was not a main concern for the literature yet, so it started to appear in different works mainly related with CSR. In fact, the keyword “greenwashing” has the lowest link strength of the ones included in this period.

As it was commented before, maybe the studies about CSR and sustainable development, gathered in the red cluster, were the origin of the academic concern about greenwashing. This is obviously linked with the environmental impact of the activities of the firms (such as construction), gathered in the green cluster; as well as with the legitimacy of the businesses, derived from their ethical behavior, referred in the blue cluster.

During the trail-blazing period (2011–2015) there was a significant increase in the number of articles. The 97 papers published in these years include 559 keywords. Figure 3 considers the 18 terms present in a minimum of 4 publications. A substantial change can be remarked: greenwashing appears in the core of the map, ceasing to be a consequence of the study of other subjects. Therefore, “greenwashing” is the main keyword, while CSR remains as a key issue. The claim for “sustainability” also gains importance as one of the main drivers of the information disclosure of firms.

The map reveals the presence of 4 different clusters. The yellow one is the smallest considering the number of keywords, but possibly the strongest regarding the internal and external links with other clusters. During this period, sustainability issues gained more importance as a relevant research topic for academics. So, it should be noted that the relationship sustainability-greenwashing, in the yellow cluster, is strengthened compared with previous years and is central in the academic concerns about greenwashing in this period. “Ethics” remains as one of the drivers of the academic literature about this topic.

The node “greenwashing” is also closely and strongly related with “management” and “corporate social responsibility”, the two key terms included in the red cluster, which has mainly business management associations (“reputation”, “information” or “firm”). The growing relevance of a stakeholder approach in business management has a clear impact in the literature, which is increasingly caring about the perception that these interest groups may have about the actions of a company. This cluster also shows the relevance of “information”, “consumer” and “consumption”, which seems reasonable, as when customers perceive a firm as socially responsible they may be more willing to buy its products, even at a higher price ( Grimmer and Bingham, 2013 ).

These impressions of the stakeholders may be also based on one critical aspect about greenwashing, the quality of the information disclosed. So, the green cluster includes terms such as “communication” or “environmental disclosure”, which should be the basis of the “legitimacy” of a company in front of the main stakeholders and, consequently, it's “performance”.

The blue cluster deals mainly with the actions required to put responsibility into practice. So, some terms such as “innovation”, “sustainable development”, “green” and “environment” are especially relevant. The presence of “green marketing” reflects that it is also possible to use the real actions and behaviors of a company to improve its image in the face of customers without greenwashing.

Finally, the remarkable growth period (2016–2020) has witnessed a definitive bloom of the publications focused on greenwashing. The 222 papers published in this period include 1,288 keywords. Figure 4 maps them, including the 26 terms which can be found in at least 10 publications.

As can be seen, the “greenwashing” node has a central position in the network, evidencing the proximity to the rest of nodes and therefore, the current relevance of the topic. According to this, recent literature maintains its interest in the relationship between “greenwashing” and “corporate social responsibility”.

Some of the trends shown in the trail-blazing period are firmly established and have been developed along these last years. So, the red cluster is mainly related with stakeholder management (“governance”, “climate change”, “corporate social responsibility”, “sustainability”, “pollution” …). Inside this group we can also find “strategy” and “performance”, reinforcing and signaling the critical role of the Environmental Social and Corporate Governance (ESG) practices of “businesses” in the “management” of companies nowadays.

The responsible behavior of a firm does not grant an adequate image in the mind of the stakeholders. An appropriate communication strategy is needed to show the interest groups what a firm really does. The blue cluster, which includes terms such as “disclosure”, “environmental performance” and “quality” gathers the main issues that could be required to gain “legitimacy” in front of the society.

Finally, the green cluster is mainly marketing oriented. Different tools and information channels that could be used to disseminate greenwashing and achieve better purchase intentions and brand attitudes are explored here. Consequently, terms like ‘consumer’, ‘perception’, ‘behavior’, ‘trust’ or ‘green marketing’ are included.

Considering the analysis of the topics boarded by the literature in the most recent years, we could state that there are currently three main pillars, which are clearly intertwined, in the academic research about greenwashing: management (related with a stakeholder approach), audit (mainly concerned about the disclosure of information) and marketing (especially focused on one stakeholder, the consumer).

4. A closer look at the academic research about greenwashing in agriculture, food industry and food retail

Amongst the 351 papers selected for this bibliometric analysis, just 19, gathered in Table 4 , are directly related with agriculture, food industry or food retail. This proportion is low if we consider the frequent presence of these industries in the mass media, associated with potential greenwashing practices. Also, the importance of the studies about food packaging ( Vila-Lopez et al. , 2021 ) could have generated more literature linked with greenwashing.

It must be remarked that just two of these 19 papers ( Francis, 2004 ; Francis et al. , 2007 ) were published before 2010, which means a low presence of the industry in the ground-setting period of the literature about greenwashing. Therefore, a first conclusion of this analysis is the presence of an interesting research opportunity: there is a need to get deeper into the study of greenwashing in these sectors.

Regarding agriculture , we can find three topics: the adoption of sustainable practices by the production units, especially the small farms; the effect of supranational organizations on the sustainability of the industry through their policies; and the impact of certification programs, contributing to greening, or to greenwashing, the production. So, the studies published in this sector are especially related with sustainability and legitimacy, but they do not get mainly concerned about the perception of the final customer.

Inside the first topic we can locate the works of Bager and Lampin (2020) about the adoption of sustainable practices in the coffee industry; Francis (2004) , dealing with the impact of corporate agriculture on sustainability; and Francis et al. (2007) , who studied the influence of the size of a farm in the adoption of sustainable practices.

Alexander (2019) analyzed the impact of the Global Alliance for Climate-Smart Agriculture on sustainability. Alons (2017) studied the inclusion of the Environmental Policy Integration in the Common Agriculture Policy (CAP) of the EU through the analysis of the historical evolution of the CAP. Finally, DeFries et al. (2017) focused on the effects of the adoption of voluntary certification programs for small farms of tropical commodities.

The main concern of the papers related with the food processing industry is related with labels and packaging, considering both the information they reveal about the product and the impressions they cause on the final customers. Organic food plays the main role in some of these studies. So, marketing and communication arise here as the main areas of concern.

Elving and Steenhuis (2014) studied the impact that an industry label has on consumers. In a relatively close approach, Gosselt et al. (2019) studied the interaction between internal CSR claims and external labels. Wagner (2015) is interested in the semiotics of food packaging and the images that can be caused by symbols, icons and barcodes. Finally, two studies carried out by the same research team ( Houghton et al. , 2018 , 2019 ) stress that all the efforts of the tobacco industry, especially in the packaging, are in fact greenwashing, as they try to save the face of a harmful product.

Organic food caught the attention of three studies: Yarosh and Mitina (2018) , who study the certainty of the claims made by the producers of organic food in Crimea; Nguyen et al. (2019) , who deal with the mediating role of green skepticism in the relationship between greenwashing and green purchase intentions; and Schuldt and Hannahan (2013) , who conducted two studies analyzing the role of the personal degree of environmental activism in the perception of organic products.

Only three articles have considered the role of greenwashing in food retail . While two of them ( Gider and Hamm, 2019 ; Saber and Weber, 2019 ) deal with the disclosure of sustainability information made by food retailing companies, Guyader et al. (2017) are more concerned with marketing, and specifically, on how the retailers can direct the attention of the consumers to eco-friendly products.

After this short review, the literature gap can be identified more precisely. There are no specific studies related with stakeholder management in any of these industries, as the attention has been focused on the analysis of the perception of the final customer. Also, the audit and information disclosure perspective could be an interesting point of view to study the food processing industry.

Anyway, as it was stated previously, the low number of papers in this area, along with the importance of sustainability in these sectors and the concentration of the papers in the last two years (7 out of 19) is a signal of an imminent burst in the literary production.

5. Conclusions

Greenwashing is a practice used by some firms, which combines a poor environmental performance with a positive communication about it ( Delmas and Burbano, 2011 ). Academic research in this field of study has grown in parallel with society and media concern about these practices. In fact, the topic is relevant for practitioners and raises challenging issues and research opportunities related with many academic disciplines ( Lyon and Montgomery, 2015 ).

The purpose of this article is to provide with an overview of the research about this form of corporate disinformation. In order to fulfill this objective, we have carried out a bibliometric study to determine the intellectual, thematic and conceptual structure of the research topic, considering the evolution of the literature from an initial ground-setting period to the current burst in the academic interest. This review and synthesis of the literature shows that greenwashing is a topic encompassing a variety of theories, approaches and actors. Thus, it remains an evolving area that requires further research and reflection.

There is an undeniable growing trend in the academic interest, which reflects the increasing concern of the society about this topic ( Delmas and Burbano, 2011 ; Antunes et al. , 2015 ; Wolniak and Hąbek, 2015 ). The relatively low concentration in terms of authors reveals the existence of a huge number of research teams currently working in this area. Regarding the sources which include these papers, the pioneer and clearly leading role of the Journal of Business Ethics is reinforced by some other prominent journals. The literature is grounded on the areas of management, with a special concern about ESG issues; marketing and communication, focused on the impact of the information revealed on the perception of the customers; audit, which analyses information disclosure; and sustainability and environmental management. As for the most cited papers, the literature about greenwashing has built its own classical references, such as Delmas and Burbano (2011) , Laufer (2003) , Lyon and Montgomery (2015) and Seele and Gatti (2017) .

The co-word analysis reveals a clear evolution from the ground-setting period, when the concern about greenwashing appeared as a result of the analysis of CSR, to the trail-blazing stage, when greenwashing became an autonomous research field, outlining the streams (consumer perception, information disclosure, stakeholder management …) that have been developed in the remarkable growth period.

It is also interesting to address greenwashing practices in different industries. In this paper, we have specifically focused on greenwashing practices in agriculture, food industry and food retail, areas of major impact of these inadequate practices. The main concern of the papers dealing with greenwashing in agriculture is the need for sustainability, while the research about greenwashing in the food industry is specially linked with the perceptions of the consumers, mainly through the packaging and labels. Finally, the scarce studies that analyze greenwashing in the food retail deal mainly with the information disclosure of companies. Our analysis shows a relatively scarce academic presence of the study of greenwashing in these industries, which reveals a clear research opportunity in an important area of concern for the society. This gap is specially related with stakeholder management, as no specific attention has been paid to this topic in these sectors.

The main limitations of this paper must be mentioned. The relatively limited sample of documents, especially in the first period, has restricted the interpretation of our findings. Also, only WoS database was selected, which may have reduced the number of results obtained. Finally, as a characteristic feature of bibliometric techniques, the interpretation of the maps is, to a certain extent, subjective.

Notwithstanding these limitations, we consider that this work helps to stimulate further interest in greenwashing as a research topic. In fact, we call for more in-depth analysis of the relationship between sustainable growth and green marketing strategies to identify greenwashing practices. Research is also needed to identify typologies of selective disclosure of information. There is a need to explore not only the financial performance derived from these practices at a given moment, but also the long-term sustainability of this behavior: literature lacks analysis about the effect of selective disclosure on other stakeholders different from consumers, like employees, investors or suppliers.

The increasing importance of the academic production about greenwashing is just the reflection of the growing concern of society not only about the impact of corporate activities over the environment, but also about the need for true, complete and clear information about these practices and their potential impact. So, the development of scientific knowledge about greenwashing becomes a piece of a virtuous circle, which puts this social claim in the spotlight of business management studies, helping in turn to fight greenwashing and, this way, to reduce the environmental impact of corporate activities: studying greenwashing helps to reduce its frequency, and therefore, heals the planet.

Historical evolution of publications

Co-occurrence network of keywords in the field of greenwashing (1999–2010)

Co-occurrence network of keywords in the field of greenwashing (2011–2015)

Co-occurrence network of keywords in the field of greenwashing (2016–2020)

Distribution of articles by most influential countries, journals and research areas

	Countries		%	Journal		%	Research areas		%
1	United States	100	28.5%	Journal of Business Ethics	21	6.0%	Business economics	167	47.6%
2	UK	34	9.7%	Business Strategy and the Environment	12	3.4%	Environmental sciences ecology	101	28.8%
3	China	28	8.0%	Sustainability	11	3.1%	Social sciences other topics	52	14.8%
4	Canada	20	5.7%	Journal of Cleaner Production	11	3.1%	Science Technology other topics	43	12.3%
5	Germany	19	5.4%	Corporate Social Responsibility and Environmental Management	7	2.0%	Engineering	28	8.0%
6	Brazil	18	5.1%	Environmental Communication	4	1.1%	Communication	27	7.7%
7	Italy	17	4.8%	Organization Environment	4	1.1%	Government law	15	4.3%
8	Australia	15	4.3%	Revista Brasileira de Marketing	4	1.1%	Geography	10	2.8%
9	France	12	3.4%				Public Administration	8	2.3%
10	Netherlands	12	3.4%				Sociology	6	1.7%

Most prolific authors in greenwashing

Rank	Name of author	Country of author	University/Institution	Number of publications
1	Lyon, T.P.	USA	University of Michigan	5
2	Chen, Y.S.	China	China three Gorges University	4
3	Font, X.	UK	University of Surrey	4
4	Siano, A.	Italy	University of Salerno	4
5	Testa, F.	Italy	Scuola Superiore Sant’Anna	4
6	Vollero, A.	Italy	University of Salerno	4
7	Braga, S.S.	Brazil	Universidade Estadual Paulista	3
8	Correa, C.M.	Brazil	Universidade Estadual Paulista	3
9	Da Silva, D.	Brazil	Universidade Estadual de Campinas	3
10	Du X.Q.	China	Xiaomen University	3
11	Iraldo, F.	Italy	Scuola Superiore Sant’Anna	3

Most frequently cited publications in greenwashing

R	Title	Authors	Year	Journal	TC	(C/Y)
1	The drivers of greenwashing	Delmas and Burbano	2011	California management review	363	40.3
2	Greenwash: Corporate environmental disclosure under threat of audit	Lyon and Maxwell	2011	Journal of economics and management strategy	293	32.6
3	Greenwash and green trust: The Mediation effects of green consumer Confusion and green perceived Risk	Chen and chang	2013	Journal of business Ethics	198	28.3
4	Social accountability and corporate greenwashing	Laufer	2003	Journal of business Ethics	457	26.9
5	Corporate social responsibility in the banking industry: Motives and financial performance	Wu and Shen	2013	Journal of banking and Finance	188	26.9
6	How sustainability ratings might deter “greenwashing”: A closer look at ethical corporate communication	Parguel, Benoit-Moreau and Larceneux	2011	Journal of business Ethics	217	24.1
7	A research note on standalone corporate social responsibility reports: Signaling or greenwashing	Mahoney, Thorne, Cecil and LaGore	2013	Critical perspectives on accounting	161	23.0
8	Perceived greenwashing: The interactive effects of green advertisement and corporate environmental performance on consumer reactions	Nyilasy, Gangadharbatla and Paladino	2014	Journal of business Ethics	134	22.3
9	Legitimizing negative aspects in GRI-Oriented sustainability reporting: A Qualitative analysis of corporate disclosure strategies	Hahn and Luelfs	2014	Journal of business Ethics	132	22.0
10	Corporate social responsibility: The disclosure-performance gap	Font, Walmsley, Cogotti, McCombes and Hausler	2012	Tourism management	145	18.1
…	…	…	…	…	…	…
12	Consumer's perception of individual and combined sustainable food labels: a UK pilot investigation	Sirieix	013	International journal of consumer studies	102	14.6

TC: Total citations; C/Y: Citations per Year

	Reference	Objective
1		Impact of the definition of climate-smart agriculture by the global Alliance
2		Presence of environmental policy integration in the common agriculture policy (CAP) of the EU
3		Adoption of sustainable practices by the companies of the coffee industry
4	(2011)	Green ads' distribution and greenwashing characteristics and practices
5	(2017)	Impact of voluntary certification programs for small farms on sustainability
6		Impact of an industry green label on the perceptions of consumers
7	(2007)	Relationship between the size of a farm and the adoption of green practices
8		Assumptions made by corporations about the economic, environmental and social dimensions of agricultural sustainability
9		How consumers deal with the CSR information delivered to them through the corporate websites of food producers and retailers
10	(2019)	Interaction between external CSR labels and internal CSR claims
11	(2017)	How retailers can attract consumers' visual attention and increase sales of eco-friendly products displaying relevant information
12	(2018)	Some positive environmental claims can, in fact, be greenwashing when they concern a product considered to be harmful, as tobacco
13	(2019)	Some positive environmental claims can, in fact, be greenwashing when they concern a product considered to be harmful, as tobacco
14	(2019)	Mediation effects of green scepticism and moderating effects of information and knowledge in the relationship between greenwashing and green purchase intentions
15		Quality and approach of reporting, considering how German grocery retailers report negative aspects and which communicative legitimation strategies they apply
16		Analysis of the relationship of environmental concern and the evaluation of organic food
17	(2013)	Perceptions of sustainable labels vs. other labels such as nutrition ones
18		Semiotics of food packaging
19		Certainty or not (greenwashing) of the claims of some organic food and non-food products

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Contributors

Greenwashing: Navigating the Risk

Peter Pears and Tim Baines are Partners and Oliver Williams is a Trainee Solicitor at Mayer Brown LLP. This post is based on a Mayer Brown memorandum by Mr. Pears, Mr. Baines, Mr. Williams, Henninger S. Bullock , Luiz Gustavo Bezerra , and Wei Na Sim . Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance (discussed on the Forum here ) by Lucian A. Bebchuk and Roberto Tallarita ; How Much Do Investors Care about Social Responsibility? (discussed on the Forum here ) by Scott Hirst, Kobi Kastiel, and Tamar Kricheli-Katz; Does Enlightened Shareholder Value add Value (discussed on the Forum here ) by Lucian Bebchuk, Kobi Kastiel, Roberto Tallarita; and Companies Should Maximize Shareholder Welfare Not Market Value (discussed on the Forum here ) by Oliver Hart and Luigi Zingales.

WHAT ARE THE KEY TAKEAWAYS?

At its core, greenwashing is about misrepresentation, misstatement and false or misleading practices in relation to environmental, social and governance credentials.
Greenwashing carries with it reputational, regulatory and litigation risks for which companies should be prepared.
There is no harmonised legal definition and the concept of greenwashing will vary by product, service, regulator and jurisdiction.
Greenwashing is not purely a legal or regulatory concept; allegations can have a significant reputational impact.
Tackling greenwashing is a priority for regulators around the globe who are taking tougher stances.
The prominence of greenwashing litigation is rising. These claims have a wider pool of claimants than in “traditional” litigation, who also have different barometers for what constitutes a “successful” outcome.
The best defences for organisations against greenwashing risk lie in existing principles of good practice in governance, disclosure and due diligence, in conjunction with a comprehensive understanding of the sustainability profile of the product, activity or transaction at hand.

Introduction

The risk of an accusation of “greenwashing” is now an important concern for many companies. Greenwashing is an ill-defined concept but, nevertheless, is increasingly a source of litigation and regulatory scrutiny – with more of both expected. It carries with it reputational, regulatory and litigation risks for which companies should be prepared. Whilst the risks are always context specific – varying by jurisdiction, industry and product – there are common themes. Here, we take an in-depth look at those themes and make suggestions for how organisations can think about mitigating greenwashing risk.

WHAT IS GREENWASHING?

There is no harmonised definition of greenwashing. Broadly, it is about claiming or creating the perception that activities, products and services are more environmentally friendly or sustainable than they actually are. Precisely what constitutes greenwashing will vary according to the type of product and service, as well as between different sectors, regulators and jurisdictions. It may also vary depending on the person making the claim – one person’s treasured sustainability claim can be another person’s greenwashing trash. For some, greenwashing is seen as a purely environmental concern, whereas many also use the term to cover social and governance issues.

This lack of clarity is significant, as it makes it difficult for organisations to establish what actually amounts to greenwashing and what they should prepare for. It is especially significant given that allegations can have substantial financial and reputational impacts.

In lieu of definitional precision, we think it is helpful to look at real-world examples. We have reviewed a wide range of greenwashing claims and controversies globally and see some common sources of dispute – see ‘‘Common themes in Greenwashing controversies’’ opposite.

COMMON THEMES IN GREENWASHING CONTROVERSIES

“Is that correct?” – A statement about environmental or ESG credentials or activities is misleading or simply not correct. “Is that the full story?” – A statement does not tell the whole story of a product or service, or relates to one part of the product or service but misleads people about the other parts or the overall impact on the environment. Sometimes, the caveats or conditions to an environmental or ESG statement are not adequately disclosed. “Your science isn’t right…..” – A statement about environmental or ESG credentials is based on flawed or incomplete evidence. ….or maybe your maths” – A statement about environmental or ESG credentials is based on flawed calculations or assumptions. “Your offsetting looks off” – Net zero targets contain a wealth of assumptions and uncertainties, particularly around the use of carbon offsets. These can be vulnerable to challenge. “A label paints a thousand words….but not necessarily the ones you intended” – A sustainable label, name, tag or rating in relation to a product or service is misleading about environmental credentials. “Your regulator would like to see you” – A regulatory statement or classification is incorrect or misleading in relation to environmental or ESG credentials.

Why are allegations of greenwashing on the rise?

According to the Grantham Research Institute on Climate Change and the Environment’s ‘Global trends in climate change litigation: 2022 snapshot’ , a minimum of 20 greenwashing cases have been filed before courts in the US, Australia, France and the Netherlands since 2016, whilst 27 cases have been filed before non-judicial oversight bodies over the same period.

INCREASED PUBLIC SCRUTINY

An obvious point, but one worth making. Socioenvironmental issues, particularly climate change, are at the forefront of public consciousness. Consumers, investors and civil society are, therefore, placing closer attention to the environmental and sustainability credentials of organisations, with the risk that they will react negatively if the underlying information is not being sufficiently, or accurately, disclosed.

INCREASED NUMBER OF STATEMENTS

Environmental and sustainability statements are increasingly a common feature of corporate disclosure and the marketing of services and products. Companies are now making, and will increasingly be required to make, detailed environmental and sustainability disclosures and aiming to demonstrate progress year on year. We have covered the details of many these new requirements in depth elsewhere (please read our articles on the EU Corporate Sustainability Reporting Directive here, the EU Corporate Sustainability Due Diligence Directive here, the UK Sustainability Disclosure Requirements here, and the US Securities and Exchange Commission’s ESG Disclosure Proposal here, and regulatory developments in Singapore here and Hong Kong here). A COMPLEX AND

EVOLVING CHALLENGE

There is no harmonised approach to tackling sustainability challenges. Whilst general objectives may be clear, determining the correct manner and pace by which an institution should tackle the various societal and environmental problems posed is complex and subject to debate and challenge. Such disagreement has set the scene for greenwashing allegations with looming greenhouse gas related targets and pledges likely to accelerate the trend. INCREASED AVENUES FOR REGULATORY

ACTION AND LITIGATION

In recent years, there has been a rapid uptake in ESG-related legislation by legislators across the globe imposing a wide variety of obligations and duties on organisations. This has increased the number of avenues open to regulators and prospective litigants to take action and bring claims against organisations in respect of their ESG-related disclosures (please read our articles on ESG-related litigation here, here and here). INCONSISTENT DEFINITIONS The lack of a harmonised definition of what constitutes ‘green’ or ‘sustainable’ means that it can be difficult for organisations to establish whether or not they are ‘greenwashing’. What is considered to be a ‘greenwashed’ claim will vary between regulators in different jurisdictions, further adding to the complexity for organisations attempting to publicly state their environmental credentials. For example, the US Federal Trade Commission (“FTC”) has not updated its influential “Green Guides” since 2012, and announced in December 2022 that it was considering amending that guidance to address claims related to carbon offsets, energy-use claims, and claims that products are “recyclable,” “organic,” “sustainable,” “compostable,” “degradable,” and “ozone-friendly” (please read our article on the FTC’s December 2022 announcement here).

DATA NOT AVAILABLE, COMPARABLE OR CONSISTENT

ESG-related data can be difficult to measure and obtain, given that it is often comprised of a mix of quantitative and qualitative data. Combined with a lack of sophisticated benchmarks as to what ‘market standards’ are, it can be difficult for organisations to ensure that socio-environmental claims are properly validated, or validated in a way that is fit for purpose from all perspectives. Products and services are, therefore, open to being marketed as ‘sustainable’ in a way that some stakeholders may argue is inappropriate.

INCONSISTENT ESG-RELATED KNOWLEDGE AND CAPABILITIES

Organisations may have a lack of (or lack of consistent) ESG-related knowledge and capabilities. This presents difficulties for organisations when they are attempting to make, and validate, socioenvironmental claims, as expertise on ESG ‘market standards’ and regulatory compliance can be difficult to obtain. There is also a significant cost element of getting appropriate ESG-related advice from consultants and advisors in multiple jurisdictions.

How should my company understand greenwashing as a risk?

We see greenwashing as posing three fundamental, overlapping risks:

REPUTATIONAL RISK

Consumers, investors and civil society are increasingly scrutinising organisations’ sustainability profiles. According to Simon-Kutcher & Partners’ Global Sustainability Study 2021 , more than a one third of the UK population are willing to pay more for sustainable products and services, and those willing to pay more would accept up to a 25 per cent premium. Conversely, the impact of allegations of greenwashing on an organisation’s brand can result in a loss of consumer trust or potential divestment by investors. For example, Shift Insight’s 2020 Report found that 48 per cent of survey respondents claimed they would buy the products and services of brands associated with greenwashing “as little as possible”.

Similarly, there are many instances of companies and financial institutions facing public criticism on account of their sustainability disclosures, products, services and, in relation to financial services, their involvement in financing transactions. The risk of reputational damage in this area is difficult to control. In some cases, the basis of the criticism may be unfounded or short of what would be required to bring the matter to litigation. Therein lies the difficulty – the standards required to bring a company’s reputation into the public eye are not necessarily the same as bringing a successful action in a court. Nevertheless, the risk of reputational damage from negative social media and press coverage remains.

REGULATORY RISK

In the UK, regulatory bodies including the Advertising Standards Agency (“ASA”) and the Competition and Markets Authority (“CMA”), are focussed on greenwashing. The ASA published Advertising Guidance on misleading environmental claims and social responsibility in June 2022, whilst the CMA published a Green Claims Code in September 2021 (for further information on the Green Claims Code, read our blog post here). The Advertising Guidance and Green Claims Code set out key principles for advertisers and traders to follow when making socio-environmental claims, whilst also implying that enforcement in this area – flowing from underlying UK consumer protections laws, such as the Consumer Protection from Unfair Trading Regulations 2008 and the Business Protection from Misleading Marketing Regulations 2008 – will soon follow. The UK Financial Conduct Authority (the “FCA”) has warned that it will “challenge firms where we see potential greenwashing, clarify our expectations and take appropriate action to prevent consumers being mislead”, whilst the CMA have announced that it intends to investigate the accuracy of environmental claims made by businesses in the fast-moving consumer goods sector (read our blog post on the CMA’s announcement here). Amongst other initiatives, the FCA also recently proposed the introduction of a new “anti-greenwashing” rule applicable to all FCA regulated firms (see our briefing here).

In Europe, the EU’s Action Plan on Financing Sustainable Growth references tackling greenwashing as a key priority. The EU aims to do so through legislation such as the Sustainable Finance Disclosure Regulation (“SFDR”), Taxonomy Regulation (the “EU Taxonomy”) and Benchmark Regulation. The EU Taxonomy establishes a unified EU classification system aimed at determining whether economic activities can be labelled as environmentally sustainable. The SFDR aims to standardise the language and labels of sustainable investment products by categorising them in respect of how ‘sustainable’ they are and by imposing disclosure requirements in relation to those categories. The Benchmark Regulation, on the other hand, creates definitions for investment benchmarks that attempt to demonstrate alignment with the Paris Agreement or low carbon objectives (for further information on the SFDR, the EU Taxonomy and the Benchmark Regulation, read our blog posts here , here , here and here ).

In Europe, “tackling” greenwashing was cited last year as the number one priority of the European Securities and Markets Authority in its Sustainable Finance Roadmap 2022-2024 (see our earlier briefing here). Putting this into action, the European Supervisory Authorities have recently published a Call for Evidence in relation to potential greenwashing practices in the EU financial sector (ESAs Call for evidence on Greenwashing (europa.eu)) and recently set out their progress reports on 1 June 2023. In addition, the European Commission has published its proposal for a Directive on the substantiation and communication of explicit environmental claims (for further information on this ‘Green Claims Proposal’, read our briefing here).

UNITED STATES

In the US, in March 2021, the US Securities and Exchange Commission (“SEC”) launched its Enforcement Task Force focused on Climate and ESG issues , with the aim of developing initiatives to identify ESG-related misconduct that is consistent with increased investor reliance on climate and ESG-related disclosure and investment. The SEC has stated that the Task Force will initially focus on greenwashing by identifying material gaps or misstatements in investor disclosure materials, whilst also analysing disclosure and compliance issues relating to fund managers’ ESG strategies. The SEC have stated that the Task Force will use sophisticated data analysis to mine and assess public information to identify potential greenwashing.

In the US, the FTC also announced in December 2022 that it was considering making amendments to its influential Green Guides — the advisory document that communicates standards for certain types of environmental claims, with commentary and advice on how companies should approach issues related to substantiation. The current version of the Green Guides, last updated in 2012, provides guidance for general environmental claims (such as “eco-friendly”) and several specific claims, including claims related to certifications and seals of approval. The FTC’s 2022 release did not propose any changes, but rather sought comment from the public regarding whether the FTC should provide additional guidance on a number of specific claims, including “sustainable,” “organic,” and claims regarding carbon offsets.

In Hong Kong, the Hong Kong Monetary Authority (“ HKMA ”) released a research report in November 2022, entitled “ Greenwashing in the Corporate Green Bond Markets ”, showing evidence that about one-third of global corporate green bond issuers are reaping the benefits of issuing green bonds without cutting down their greenhouse gas (“ GHG ”) emissions. The HKMA noted that this type of ‘greenwashing’ behaviour can impede progress on combating climate change and could lead to financial instability if the market loses confidence in green bonds and other green asset classes (for further information on the HKMA report, read our blog post here ).

Singapore has also recognised the threat that greenwashing poses to the green finance sector and the government is implementing a taxonomy based on consistent set of global standards and establishing requirements for disclosures and reporting to combat greenwashing. In particular, the Monetary Authority of Singapore (“ MAS ”) established the Green Finance Industry Taskforce (“ GFIT ”) to develop a taxonomy for Singapore-based financial institutions to provide a common framework for classification of economic activities upon which financial products and services can be built (the “ Singapore Taxonomy ”). A key purpose of developing the Singapore Taxonomy is to encourage the flow of capital to support the low carbon transition needed to avoid catastrophic climate change, as well as the environmental objectives of Singapore. The MAS is also actively participating in regional efforts to develop a taxonomy for ASEAN countries which are serviced by Singapore-based financial institutions, These efforts take international goals into account while, at the same time, factoring in the ASEAN region’s specific “context and circumstances”. See our blog posts on GFIT’s first and second consultation papers on Singapore’s proposed green taxonomy for financial institutions here and here .

In Brazil, the Brazilian Securities and Exchange Commission (the “CVM”) recently approved guidelines to discuss and build a Brazilian taxonomy addressing sustainable finance issues and to take oversight action to inhibit greenwashing on the Brazilian stock market. The Brazilian Congress and the CVM are also discussing whether the Brazilian regulatory framework should evolve to better accommodate greenwashing concerns. Currently, greenwashing is predominantly governed by the Brazilian Consumer Protection Code 1990, which prohibits the use of misleading and/or abusive claims in advertisements. However, bills of law have been proposed with the aim of requiring companies to explain green claims within their product labels and marketing materials.

Regulatory enforcement action has already begun. In the UK, the CMA has launched investigations into retailers focussing on (among other things) whether the statements made regarding the environment credentials of the retailers’ products are too vague and whether the criteria adopted to decide which products are included in eco-friendly collections are lower than consumers may reasonably expect. The CMA has warned that it may issue sanctions following the conclusion of its investigations, which could result in the retailers being forced to give undertakings to change the way they operate.

Moreover, the ASA has banned a number of advertisements made by companies in the oil & gas, aviation and food sectors for misleading the public on the socio-environmental credentials of their products. The ASA has warned these companies that the advertisements “must not appear again in the form complained of”, otherwise they may face sanctions (for further information on the recent ASA action, read our blog post here ).

The SEC’s Enforcement Task Force has also taken enforcement action against multinationals regarding the alleged deliberate manipulation of audits, fraudulent declarations and misleading material statements in respect of ESG-related disclosures and regulatory filings. As well as taking-up a significant amount of organisational resource to deal with the regulators, the actions have had adversely affected the share prices of the relevant organisations (for further information on the SEC’s enforcement action, please read our blog post here ).

While there has been no notable greenwashing enforcement action to date in Asia, as regulators in Hong Kong and Singapore begin to implement globally consistent sustainability reporting requirement for listed companies and across the financial services industry, regulatory enforcement actions are expected to develop over time in these jurisdictions.

LITIGATION RISK

In addition to the risk of enforcement action by regulators, civil litigation against organisations accused of greenwashing – in particular, climate-related greenwashing – is becoming increasingly common.

The rise can be broadly attributed to the following key factors:

a more sophisticated and stringent ESG-related regulatory landscape, combined with increased recognition of the fact that false, misleading, overstated or unsubstantiated environmental advertising is largely prohibited under existing consumer protection and advertising law, has provided more avenues for potential litigants to hold organisations to account;
the increased availability of litigation funding, and the ability of not-for-profit organisations to gain access to grants and donations from philanthropic foundations, has deepened the pockets of litigants;
a broader range of stakeholders in ESG-related matters than in ‘traditional’ litigation has led to a wider pool of prospective litigants; and
the ‘winning isn’t everything’ nature of strategic litigants, who’s aim is not always to necessarily ‘win’ the litigation, but to create negative publicity to deter consumers and investors from the purchasing the products and services of, or investing in, alleged ‘greenwashers’.

As noted in the Grantham Research Institute’s 2022 snapshot , the recent wave of greenwashing-related litigation can be divided into three types of case, namely cases challenging misrepresentation, omissions, misleading evidence and mislabelling in respect of organisations’ claims regarding “(1) corporate and governmental commitments, (2) product attributes, and (3) disclosure of climate investments, financial risks and harm caused by companies”.

In terms of corporate and governmental commitments, organisations have faced claims alleging that their GHG reductions plans – usually ‘net zero’ or ‘carbon neutral’ targets – are not sufficiently clear or credible. For instance, in a recent claim against a multinational energy company, the claimants alleged that the company’s net zero plan failed to account for expected production and emissions growth from long term fossil fuel exploration opportunities, whilst also failing to represent accurate modelled reductions in respect of the company’s scope 1, 2 and 3 GHG. For more on this area, see section “A case study – the challenge of net zero and offsets” below.

Financial institutions, in particular, are increasingly being challenged by civil litigation. As key actors in financing the energy transition, their activities have been subject to particular scrutiny. Recent actions have included cases focussing on the inadequacy of corporate disclosure and failure to comply with recently developed human rights and environmental due diligence obligations.

With regards to product attributes, claims have been brought against retailers, for example, on the grounds that the publicised environmental credentials of their products – through the use of the likes of ‘environmental scorecards’ and ‘sustainable attribute criteria’ – were misleading, alleging that such publications contained falsified information that did not align with the underlying data. Moreover, energy companies have also faced claims alleging that the affirmative misrepresentation of the environmental benefits of fossil fuel-based products has violated consumer protection laws.

These different ‘categories’ of greenwashing cases serve to show that there are a number of grounds that prospective claimants may pursue alleged ‘greenwashers’. Regardless of the ‘category’ of greenwashing, any such litigation poses a variety of challenges to the defendant organisation, as it requires an expenditure of organisational resource (often for an uncertain duration, with an uncertain outcome) and may well result in a court order to pay damages, both of which can have significant financial and reputational repercussions.

However, it is important to note that there are jurisdictional nuances to litigation risk. The risk of third party litigation and/or representative action relating to greenwashing is likely to be less significant in jurisdictions such as Hong Kong and Singapore. This is due, in part, to cost and the fact that class action proceedings of this nature are restrictive and uncommon. Further, contingency fees are generally not allowed for court litigation in these jurisdictions.

The challenge of net zero and offsets

Net zero policies and targets and the use of carbon offsets present particular challenges in the context of greenwashing. It is an area where many claims, targets and aspirations are made, but one where there is little by way of formal regulation to guide businesses.

This has resulted in a landscape where it is difficult to verify whether the use of carbon offsets actually represents genuine carbon reductions, as exemplified by the Guardian recently claiming that over 90% of Verra-certificated rainforest offset credits are “phantom credits”, a claim that Verra has stringently denied . (for more information on the integrity challenge in carbon offsets, read our briefing here ).

Several disparate, but interrelated, developments illustrate the challenges of navigating net zero commitments, carbon markets, and carbon disclosures:

A UN report, “ Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions ”, published in November 2022 gives rise to a number of new hurdles that businesses must cross in implementing net zero commitments, and sets out recommendations for use of voluntary carbon credits. Some of the recommendations have, however, been criticised as having a lack of clarity, including on how to determine a non-state entity’s “fair share” of emissions.

The Science Based Targets Initiative , requires that “A company is only considered to have reached net-zero when it has achieved its long-term science-based target. Most companies are required to have long-term targets with emission reductions of at least 90-95% by 2050. At that point, a company must use carbon removals to neutralize any limited emissions that cannot yet be eliminated.” Note that carbon removal credits are different to carbon avoidance credits – an area misunderstood by many.

The Integrity Council for the Voluntary Carbon Market (“ICVCM”) has been established to set and enforce definitive global threshold standards, drawing on the best science and expertise available, so high-quality carbon credits can efficiently mobilise finance towards urgent mitigation and climate resilient development. As part of the above, the ICVCM’s Core Carbon Principles (“CCPs”) and Assessment Framework (“AF”) will set new threshold standards for high-quality carbon credits, provide guidance on how to apply the CCPs, and define which carbon-crediting programs and methodology types are CCP-eligible. These initiatives are developing in tandem and will add a further layer of due diligence that needs to be carried out.

Meanwhile, Verra, a non-profit organisation that sets standards for voluntary carbon markets, has expressed its view that the ICVCM should drastically revise its process for developing the CCPs and AF for the voluntary carbon market. This indicates that there is no firm view, and is unlikely to be a firm view, on what represents an acceptable offset for some time.

In order to “promote the deployment of high quality carbon removals whilst minimising the risk of greenwashing”, the European Commission has proposed a regulation to facilitate the deployment of carbon removals by establishing a voluntary EU certification framework.

To do this, it proposes to set out:

Quality criteria for carbon removal activities in the EU;
Rules for the verification and certification of carbon removals; and
Rules for the functioning and recognition of certification schemes by the European Commission.

Putting all of these pieces of the ‘net zero jigsaw’ (and the many others that already exist) is no mean feat. Care will need to be taken about clearly identifying how net zero targets will be disclosed and met, the use of offsets and removal credits, and the kinds of offsets and removal credits that will be used.

Navigating the risks

How to navigate greenwashing risk.

In our view, mitigating greenwashing risk lies in existing principles of good practice with respect to governance, disclosure and due diligence, in combination with an understanding of the sustainability profile of the product, activity or transaction at hand.

Although the exact practices and procedures that organisations adopt will, and should, differ between products and services, sector and jurisdiction, organisations may wish to consider the following ‘good practice’ steps.

Policies and procedures: Internal policies should be developed through collaboration between management and the compliance, external counsel, risk, sustainability and internal audit teams. Such policies should provide clear guidance on potential greenwashing risks facing the organisation and how such risks can be mitigated. The policies should also cover how management, and relevant employees, should monitor and record relevant information to ensure that there is evidence the organisation’s policy was followed, which will be critical in the event an allegation of greenwashing is made. When developing such policies, the organisation should account for current, and likely future, legislation impacting how organisations make socioenvironmental claims, as well as trends in greenwashing-related litigation and enforcement action by regulators;
Training: Organisations should focus on enhancing awareness of greenwashing risks amongst their employees. Training, using illustrative examples of ‘good’ and ‘bad’ behaviour, will be key to ensuring that the organisation’s position on greenwashing is understood, clear and transparent at all levels of the organisation; and
Understanding market practice: Staying up-to-date with developments in the ‘greenwashing’ space will be key to ensuring that the organisation can pick-up ‘lessons learnt’ and understand what regulators and stakeholders want to see in terms of the publication of socio-environmental credentials.
Clarity and accuracy: Disclosures should be accurate, clear and comprehensible, avoiding the use of jargon. If ‘broad terms’ are being used, such as ‘green’ or ‘sustainable’, they need to be explained, evidence-based and verifiable. Moreover, information should not be ‘cherry-picked’, with the effect that only the positive socio-environmental credentials of products and services are highlighted, ignoring the negative aspects;
Identify and cure any discrepancies between what is “said” or publicly disclosed and what is “done” in any sustainability claim: This difference has been the basis of a number of regulatory enforcement actions and so needs to be addressed;
Disclaimers: Wherever possible, organisations should use risk factors, qualifications and/or disclaimers in an attempt to mitigate the risk of claims being deemed as inaccurate and/or misleading. Many socio-environmental claims will be “forward looking statements” and should be treated with the same care and disclaimer language as any other future projection;
Don’t overstate, do explain: Care should be taken to ensure that a sustainability claim is verifiable and does not overstate. Where possible, the conditions, assumptions and calculations behind a sustainability claim should be clearly stated and publicly available;
Third party verification: Assessment of claims by third party consultants can be useful in providing back-up and confidence to socio-environmental claims;
Legal review/audit : As with any piece of public disclosure, socioenvironmental claims should be reviewed by legal counsel and/or audit teams; and
Silence may be golden, but can it be green? : A number of commentators have observed the practice of “greenhushing” – choosing not to publicise details of climate targets in an attempt to avoid scrutiny and allegations of greenwashing. For many, this is unlikely to be a sustainable course of action (No pun intended….). Incoming or proposed US, EU and UK corporate disclosure regulations, such as the EU Corporate Sustainability Disclosure Reporting Directive, will simply require these disclosures for most large companies. Making every effort to ensure disclosures are correct, particularly as a variety of stakeholders will want to see them, is likely the better course of action.

DUE DILIGENCE

Review current socio-environmental claims: Organisations should examine the claims that they are currently making about their products and/or services – used on their product packaging, public disclosures or advertising campaigns, for example – to ensure that such claims are justifiable and based on factual evidence. Such a review should be done in light of the evolving regulatory landscape and market standards, to consider whether any claims may be actionable;
Review the achievability of future claims: Organisations need to ask whether they can actually achieve intended future ESG-related commitments and claims. Measuring what is achievable requires planning and scenario-analysis, both of which will inevitably be underpinned by a series of assumptions. The assumptions need to be science-based, considering factors such as the availability of resources and technology;
Transactional due diligence: when undertaking transactions, organisations should consider the sustainability profile of the counterparty, the target company, target investment etc, but also their sustainability profile (including the compliance with due diligence obligations required by law, such as supply chain due diligence obligations. This will include (but is not limited to)) consideration of the impacts of the transaction on the organisation’s reputation, how the transaction will fit-in with the organisation’s sustainability profile and industry, and whether the transaction is aligned with the organisation’s relevant policies and procedures; and
Carbon offset integrity due diligence: when it comes to leveraging carbon offsets to neutralise outstanding GHG emissions, organisations should consider carrying out due diligence to confirm the quality and integrity of their offsets. Although carbon offsets are certified and audited pursuant to relevant methodologies (as discussed above), the issuance and monitoring processes are by no means bullet-proof, meaning there is a significant greenwashing risk related to the use of offsets.

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Research: How Some Companies Avoid Accusations of Greenwashing

Joel Bothello,
Ioannis Ioannou,
Vlad-Andrei Porumb,
Yasemin Zengin-Karaibrahimoglu

An analysis of 515 companies in 35 countries reveals a troubling trend.

Recent research reveals a troubling trend: apex firms in Business Groups often promote sustainability without substantial action. Analyzing data from 515 companies in 35 countries, the authors found that apex firms, especially those sharing a brand with affiliates, engaged less in sustainability initiatives than their lower-tier counterparts. This potential “greenwashing” might be tolerated due to the unique BG structure, where apex firms play communicators and affiliates act as implementers. Despite market tolerance, such discrepancies could harm long-term reputations. For genuine sustainability, firms must ensure accurate communication, inspire affiliates with shared values, diffuse best practices groupwide, and stay attuned to evolving stakeholder expectations. Sustainability is not just a symbolic gesture but a commitment requiring consistent, substantive action.

Sustainability has rapidly become an indispensable part of corporate governance. But as companies commit to green practices, a worrying trend is also surfacing: Some corporations are painting themselves as green while failing to back their claims with concrete actions. Numerous examples abound: The UK Advertising Standards Authority (ASA) has recently banned a number of ads from prominent companies, including HSBC for being “misleading” about efforts to tackle climate change. The ASA also banned the ads of Ryanair for the company’s unsubstantiated claim of being Europe’s lowest emissions airline.

JB Joel Bothello is the Concordia University Research Chair in Resilience and Institutions, and associate professor in the Department of Management at the John Molson School of Business at Concordia University. He uses organizational theory to explore a range of business and society issues, ranging from CSR and sustainability to informal economy entrepreneurship.
II Ioannis Ioannou is an associate professor of strategy and entrepreneurship at London Business School. His research focuses on corporate sustainability and the strategic integration of ESG issues by companies and capital markets.
VP Vlad-Andrei Porumb is an associate professor of accounting at The University of Manchester.
YZ Yasemin Zengin-Karaibrahimoglu is an associate professor of accountancy at the University of Groningen.

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In 2009, Volkswagen launched a wide-reaching marketing campaign to promote its “clean diesel” cars. Across print and televised ads, including in one prime-time Super Bowl commercial, the automaker touted a drastic reduction in the tailpipe emissions of its new VW and Audi models. “Green has never felt so right,” the Audi commercial bragged .

But a few years later, the U.S. Environmental Protection Agency (EPA) discovered that Volkswagen had installed software allowing it to cheat emissions tests for 11 million of its vehicles. The automaker’s so-called clean diesel cars actually produced nitrogen oxide emissions up to 40 times the legal limit. The resulting “Dieselgate” scandal marked one of the most notorious examples to date of deceptive environmental marketing—a phenomenon known as greenwashing—and ultimately cost Volkswagen nearly $40 billion.

But greenwashing is often far less sensational—and far harder to spot. We regularly encounter misleading sustainability claims on packaging for our everyday household items but also in, say, so-called sustainability initiatives promoted by major corporations. Given how urgent the climate, biodiversity, and public health crises have become, sorting sustainability fact from fiction is more important now than ever. Let’s get into what greenwashing can look like and what can be done about it.

A group of protesters hold a large banner that mimics a laundry instruction tag and reads "Greenwash Instructions"

Ana Fernandez/SOPA Images/LightRocket via Getty Images

What does greenwashing mean?

Greenwashing is the act of making false or misleading statements about the environmental benefits of a product or practice. It can be a way for companies to continue or expand their polluting as well as related harmful behaviors, all while gaming the system or profiting off well-intentioned, sustainably minded consumers. The term was actually coined back in 1986 in an essay by environmentalist and then student Jay Westerveld. While visiting a hotel in Fiji, Westerveld noticed that it asked guests to reuse towels for the planet’s sake—a request that would also conveniently save the hotel money. Meanwhile, the hotel, located near sensitive island ecosystems, was in the middle of an expansion.

In the decades since, a number of high-profile greenwashing examples have made front-page news. In the 1980s, Chevron launched its infamous People Do campaign, touting its work protecting wildlife, even while the company continued to spill oil in sensitive ecosystems and drive climate change. And in the early 2000s, fossil fuel company BP coined the term “carbon footprint” when it launched a calculator for individuals to assess their personal emissions, avoiding the fact that its own emissions were among the highest on the planet.

But as environmentalism has gone mainstream—meaning more consumers are willing to pay for sustainable products, and the financial sector has turned its attention to environmental risk—greenwashing has gotten more sophisticated. “[Companies are] better at how they message it, so it doesn’t come across quite so badly. “says Todd Larsen, the executive co-director for consumer and corporate engagement at Green America, one of the first organizations to put together vetted lists of green businesses and products. “It’s more in the general marketplace now.”

What are some examples of how greenwashing shows up?

Greenwashing can still look like an overt, and potentially even illegal, lie. But as Larsen notes, most greenwashing is subtler and includes more insidious forms of manipulation, like these common strategies:

Nature-based imagery —such as trees, leaves, or animals—on product packaging and in advertisements can imply sustainability, even if the company or product either actively harms the environment or takes no real steps to protect it.

Poland Spring bottled water

Mike Mozart CC BY 4.0

Learn More about Greenwashing

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Just scan the aisle of bottled water brands and you’ll notice a trend: packaging featuring scenic naturescapes and pristine rivers, lakes, and springs. In reality, the companies that manufacture bottled water are some of the world’s biggest contributors of plastic waste, and they often drain ecologically essential water resources in the process of sourcing. BlueTriton Brands—the company formerly known as Nestlé Waters—is behind a third of U.S. bottled-water brands , including Poland Spring.

More recently, BlueTriton faced litigation over its attempts to market its bottled water as sustainable, despite its “significant and ongoing contributions to plastic pollution and its depletion of natural water resources,” the lawsuit asserts. (Never mind that just making the plastic for a liter bottle of water takes three to four more liters of water.) In a motion to dismiss the case , BlueTriton’s attorneys defended the company by saying its “representation of itself as ‘a guardian of sustainable resources’ and ‘a company who, at its core, cares about water,’ is ‘vague and hyperbolic’” and therefore qualifies as “non-actionable puffery.” That’s about as close to a definition of greenwashing as you can get.

Environmental buzzwords that have no legal weight—like “natural” or “eco-friendly”—and tell you little about a company’s specific sustainability practices are also everywhere. This language is intentionally vague enough to remain subjective and unregulated while still attempting to convince customers of a product’s benefits.

A swatch of brown empty land in the middle of a green forest

Clearcut area of Canada’s boreal forest, which has been continuously damaged by companies like P&G to produce toilet paper

River Jordan for NRDC

You should be especially skeptical of greenwashing tied to sectors known for their environmentally harmful practices—such as logging and the various industries it feeds. Exhibit A: tissue product manufacturers and toilet paper brands like Charmin. Procter & Gamble, the company that makes Charmin, created a catchy marketing slogan —“Protect, Grow, and Restore” forests. But the slogan only serves as smoke and mirrors for unsuspecting buyers who don’t know its supply chain includes pulp sourced from irreplaceable primary forests, which are key allies in our fight against climate change. Sometimes these buzzwords are even concealing downright poisonous business ventures, like the practice of “ chemical recycling .” The phrase implies materials are turned into new plastic when it generally means plastic is burned to make fuel. That process can emit more greenhouse gases than fossil fuel–fired power plants.

Even labels that promote a specific benefit, like “BPA-free,” should be approached with caution. That’s because, as public health advocates note, the chemical industry leans on a laundry list of “ regrettable substitutions ,” i.e., similarly toxic chemicals that have become routine replacements for better-known offenders. “The problem is that we don’t start from the precautionary principle in the United States,” Larsen says, “which would say don’t use a chemical or something that can harm you until you’ve proven it’s safe. Our regulatory framework is that you can use anything you want until it’s proven that it can harm you—and that proof is very arduous.”

Large plastic jugs of laundry detergent on a grocery store shelf

Seventh Generation’s cardboard laundry detergent container, which has a plastic pouch inside that many people are unlikely to separate for recycling

Lindsey Nicholson/UCG/Universal Images Group via Getty Images

Products that lean on official-looking labels. Companies that produce plastic products often try to assuage consumer guilt by prominently featuring the ubiquitous recycling symbol or language like “please recycle” on the packaging. The logo may make someone feel like the choice is greener even if that type or mix of plastic is difficult to recycle in practice. It also puts no real onus on the manufacturer to actually reduce waste in its supply chain or to recycle, for that matter. As it stands, the world continues to recycle a meager 9 percent of the 440.9 million U.S. tons of plastic waste produced each year. Instead of these flimsy or false solutions, companies should take tangible steps , like reducing overall plastic use, upping the percentage of recycled content, or even investing in programs that help collect postconsumer waste.
Companies that tout their latest (and even legitimate) sustainability initiative but that do so to draw attention away from the harmful activities making up the majority of their business practices.

When the company Ozinga Bros recently proposed building a massive “underground storage facility” below Chicago’s residential Southeast Side neighborhood, it laid the greenwashing on thick, says Gina Ramirez , NRDC’s Midwest outreach manager.

The company touted the possibility that its Invert mining project would eventually house green businesses, like solar panels or vertical gardens. However, Ramirez knew it’d more likely become a place for toxic industry to congregate in her already overburdened neighborhood. Ozinga Bros hoped to bolster its green reputation by planting trees , putting an environmental activist on its staff, and even building a community center that was quite literally decked out in green. But when it came to discussing the mine, they failed to provide studies on the expected impact to air quality or transportation. “You’ll see tree plantings, recycling, promises for green infrastructure,” Ramirez says, “but then the means to get that supposed green infrastructure is really hazardous to your health—like blowing up dynamite to mine for 17 years and bringing thousands of additional diesel trucks into the neighborhood.”

A person on a bicycle on a city street with refinery stacks rising into the sky in the background

A worker riding their bicycle to the BP oil refinery in Gelsenkirchen, Germany

Martin Meissner/Associated Press

Ambitious climate pledges that sound great on paper but offer few specific or quantifiable changes that actually reduce greenhouse gas emissions in the near term.

You’ve probably noticed that thousands of companies have publicly rolled out net-zero pledges , including fossil fuel companies like ExxonMobile and BP that have no intention of stopping further pollution-producing development. That’s because it’s possible to finagle the math to imply emissions reductions on paper while continuing business as usual or even increasing climate pollution.

The way that works is that companies can rely heavily on what are called “carbon offsets” to zero out their own emissions. These are commitments to take an action that reduces carbon emissions elsewhere, like paying to conserve carbon-rich land that otherwise would’ve been developed. But not only are the climate benefits of offsets not guaranteed —a “conserved” forest could be lost to an unexpected wildfire, for instance—there simply isn’t enough land available to allow everyone that plans to rely on offsets to do so. Without first changing polluting practices, these net-zero pledges are a form of greenwashing.

Why do companies greenwash?

Because going green sells. In 2021, 85 percent of global consumers said they considered the environment more when shopping than they did just five years prior, and at least a third said they are willing to spend more money for green products. This is particularly true for a new generation of socially conscious consumers. One recent study found that Gen Z considers climate change the single-greatest issue we face. “Purpose and impact are more in the minds of young people today,” says Andreas Rasche, greenwashing expert and professor at the Copenhagen Business School. Young people are both less willing to work for companies they perceive as misaligned with their values—and less willing to support them as consumers.

But, Racshe explains, it’s not just “the bad apples or the straightforward, rogue people trying to deceive others.” In his work, he often sees well-intentioned sustainability practices not living up to their promise because of mismanagement, poor internal communication, and a lack of sustainability expertise on staff.

How does greenwashing impact consumers?

Over time, greenwashing erodes consumer faith, which makes us more likely to dismiss environmental claims altogether—even the ones that are legitimate.

But there are far worse impacts too. Companies making these greenwashed products or running these greenwashed businesses and facilities have a history of setting up in low-income communities, communities of color, or both. For example, this trend held true for seven of the eight facilities NRDC researched during our investigation of chemical recycling . And the burning of that plastic, by the way, emits toxic chemicals linked to health problems like cancer and birth defects.

An enormous barge carries large industrial equipment

A furnace being delivered by barge to Gulf Coast Growth Ventures’ plastic manufacturing complex, a joint venture between ExxonMobil and SABIC, Corpus Christi, Texas

Eddie Seal/Bloomberg via Getty Images

What are the consequences for our environment?

Greenwashing gives some companies an unfair advantage. They are able to keep up with their polluting practices while simultaneously benefiting from the illusion of environmental stewardship. They can also make it harder for those who are doing the right thing to stand out in the marketplace. All of that has ongoing ripple effects for the environment. Take the Invert mine plans in Chicago. NRDC’s Ramirez pointed out that the drilling, explosions, and excavations would go on for years and kick up all kinds of pollutants. It’s worth noting that this includes pollution from prior polluters, as this neighborhood has long been treated like a dumping ground by toxic industries . The impact to the air alone is staggering but there will also be increased noise pollution and emissions. In other words, when it comes to greenwashing, public health and the environment stand to suffer.

What can be done to address greenwashing?

The best short-term means of tackling greenwashing is to build awareness. You’re doing that by just reading this piece. Plus, we’ve got an action-oriented guide to help you cut through most murky greenwashing waters. Consumer activism and consumer advocacy groups have also helped lead the way via third-party certifications, as have environmental advocacy groups demanding corporate accountability. But for long-term strategies, the government has to take steps to reduce the burden on consumers.

In the United States, the Federal Trade Commission is in charge of regulating unfair or deceptive marketing claims, including ones related to the environment, but the agency has gone after greenwashing violators fewer than 100 times since the early 1990s and seemingly only in the most egregious cases. There are other innovative ways forward that the United States could learn from. The European Union, for example, recently launched a taxonomy system that publicly ranks companies on their sustainability efforts according to a standardized set of criteria, creating more transparency for investors and policymakers. “It takes quite a bit of the ambiguity out of the debate,” says Rasche.

Ultimately, setting more protective environmental regulations at the outset can do a lot of the legwork. Federal agencies like the EPA and U.S. Food & Drug Administration must take the lead on restricting dangerous chemicals. And the U.S. Securities and Exchange Commission can hold greenwashing companies accountable for claims that mislead investors. Lawmakers at the state and local levels have a role to play too. In the case of Chicago’s Southeast Side, advocates are pushing for both a city ordinance and a state law to make it more difficult for companies to further target environmental justice communities like theirs. Activists exposing greenwashing schemes like this have shown us over and over again that what’s best for big business rarely matches what’s best for communities. And increasingly, their message is clear: Valuing profits over people will not be tolerated.

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GREENWASHING: A Study on the Effects of Greenwashing on Consumer Perception and Trust Build-Up

January 2019

Amity University

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Research in the greenwashing field: concepts, theories, and potential impacts on economic and social value

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Published: 29 August 2023
Volume 28 , pages 405–444, ( 2024 )

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Francesca Bernini ORCID: orcid.org/0000-0001-7638-9874 1 &
Fabio La Rosa ORCID: orcid.org/0000-0002-6625-2580 2

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This paper aims to define a theoretical background for investigating greenwashing from a business economic perspective. We consider possible research questions in the relevant field of study, which is business economics studies. The first research step proposes a path that will orient scholars to the multifaceted perspectives of greenwashing. The second step analyzes the main theories that can support researchers and might motivate the possible greenwashing strategies. The third step highlights the potential link between greenwashing, reputational and relational capital, and a broad concept of value that includes the social dimension. Finally, we propose a conceptual framework that highlights some emerging research issues and anticipates the effects of greenwashing. Considering that self-regulation is not effective in reducing the gap between substantive and symbolic behaviors, the main practical implication of this study lies in addressing the need for stronger regulation and effective legal enforcement, not only to improve mandatory environmental disclosure but also to develop an audit process of such disclosure. Our analysis offers a number of suggestions for future research. Considering the centrality of disclosure in the theoretical framework we defined for greenwashing, future research could adopt the legitimacy theory perspective to focus on the role of mandatory environmental, social, and corporate governance (ESG) disclosure as well. Further, our conceptual framework highlights a possible research issue that investigates how a social value destruction resulting from inconsistent environmental strategies, may impact shareholders’ economic value.

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Greenwashing in the Indian corporate landscape: an empirical assessment of ESG disclosures of NIFTY 50 companies

Avoid common mistakes on your manuscript.

1 Introduction

Companies are aware that environmental risks are a threat to their competitiveness and survival. For this reason, they should consider those risks, in order to define their position in the field of social responsibility and also to contribute to their value creation processes (Seele & Schultz, 2022 ). Further, the need to operate in an inconstant environmental context, which is a consequence of the recent economic-financial crisis, the pandemic, and the current war, shapes the effort toward reaching environmental, social, and corporate governance (ESG) objectives. These recent occurrences push the researcher to investigate the role sustainability assumes as a possible resilience tool, in a process oriented to create economic and social value (Lee & Raschke, 2023 ).

The above considerations shed light on the essential role of corporate voluntary disclosure in legitimizing companies’ behaviors on the one hand, and emphasizes the need for developing a mandatory body of ESG information, on the other (Mahoney et al., 2013 ; Perera et al., 2019 ).

Greenwashing is a phenomenon arising from companies’ need to “resolve” the trade-off between the increasing importance of environmental compliance and their real and supportable efforts toward this objective. The word “greenwashing” is derived from the combination of “green” and “brainwashing” (Mitchell & Ramey, 2011 ), where brainwashing is applied to an environmental context. Greenwashing is a disclosure-based strategy (Lee & Raschke, 2023 ; Seele & Schultz, 2022 ; Seele & Gatti, 2017 ; Cooper et al., 2018 ) that may depend on some external conditions, incentives, or pressures that characterize the institutional context in which the strategies of deceptively disclosing “green” activities occur (Zharfpeykan, 2021 ; Velte, 2022 ; Marquis et al., 2016 ; Seele & Schultz, 2022 ; Li et al., 2023 ). This highlights that the institutional setting is a crucial determinant of companies’ environmental responsibility effectiveness (Li et al., 2023 ; Marquis et al., 2016 ).

Academics have not yet uniquely defined the role of environmental sustainability. In fact, scholars (e.g., Bini et al., 2018 ) speculate whether it is the most important challenge in the current socio-economic context or whether it is a “matter” that ought to be managed to maintain the company’s competitive advantage or to improve its financial performance. However, recent studies show ambiguous results regarding the effects of ESG practices on financial performance (Lee & Raschke, 2023 ; Li et al., 2023 ). Regarding environmental sustainability the argument is that financial performance can be supported by making restricted efforts via the use of misleading communication, since stakeholders cannot identify companies’ actual behavior, nor recognize asymmetric information (Berrone et al., 2017 ; Wang et al., 2018 ; Zharfpeykan, 2021 ).

Our literature review sheds light on some research issues to be deeply investigated to comply with the needs of scholars seeking a strong and reliable theoretical foundation for defining greenwashing (Lyon & Montgomery, 2015 ; De Jong et al., 2020 ; Gatti et al., 2021 ). It also highlights calls from authorities and regulators who need a definition that could be useful for the controlling authorities to “understand greenwashing” (e.g., ESA, 2022 ).

Despite the widespread use of non-academic definitions of greenwashing (e.g., Oxford English Dictionary; Greenpeace, 2021 ; TerraChoice, 2007 ), there is also the need to organize a theoretical path that will be useful for understanding the multifaceted perspectives of greenwashing (Lyon & Montgomery, 2015 ), also due to the interdisciplinary impact that greenwashing generates. In fact, greenwashing might generate impacts felt in several fields of study such as sociology, psychology, and law (i.e., legality, rulings, corruption) and ones that reflect on, among others, the role of corporate disclosure, financial performance and value, or strategy and marketing.

Our work aims to provide an inclusive outlook on the different interpretations of the greenwashing concept, by proposing a comprehensive view of greenwashing-related features. It also considers motivations of greenwashing by adapting certain theories developed in a socio-political context, as well as those related to voluntary disclosure, referring also to greenwashing strategies (Uyar et al., 2020 ; Mahoney et al., 2013 ; Delmas & Burbano, 2011 ). Our research ultimately defines a conceptual framework by analyzing potential links between greenwashing, reputational and relational capital, and a broad concept of value that includes its social dimension.

Our conceptual framework could become a background for future empirical testing of the research questions arising from the analysis of greenwashing in a business economic perspective. For the analysis, we adopted a qualitative research method. Starting from these pointers, this paper aims also to clarify a number of emerging and relevant issues from a qualitative research perspective and to develop a theoretical background for investigating the determinants and the potential effects of greenwashing in business economics studies, also articulating possible research questions.

The paper is organized as follows. In Sect. 2 , we illustrate the methodology we adopted to develop our research. Next, we illustrate the institutional background’s main features and its possible role as a greenwashing driver (Delmas & Burbano, 2011 ) in Sect. 3 . In Sect. 4 we propose a path for orienting scholars to the multifaceted perspectives of greenwashing. In fact, scholars have emphasized the need for a review of the greenwashing concept (Lyon & Montgomery, 2015 ; De Jong et al., 2020 ; Gatti et al., 2021 ). To foster a broader visualization of the greenwashing concept in an academic framework, we propose a visualization organized according to the most acknowledged features of the concept. Subsequently, in Sect. 5 , we analyze the main theories that might support researchers and motivate the possible greenwashing strategies. Then, in Sect. 6 , we highlight the potential link between greenwashing, reputational and relational capital, and a broad concept of value that includes the social dimension. Also, we propose a conceptual framework that can highlight various emerging research issues and that anticipates the greenwashing effects, also suggesting an agenda for future research. Finally, Sects. 7 and 8 give the discussion and the conclusions, respectively.

2 Methodology

Our research aims to design a conceptual framework for developing research in the CSR field (Kurpierz & Smith, 2020 ), with a specific focus on environmental issues. The environmental dimension of CSR could be susceptible to a particular phenomenon identified as greenwashing.

To develop our conceptual framework, we defined a four-step research design adopting a qualitative research method and starting from a literature analysis.

Our literature review started with an analysis of a set of papers extracted from the Scopus database. We focused on relevant articles published between 2000 and 2023 because research on greenwashing from business administration and management perspectives before 1990 is scant, and between 1990 and 2000 we found only three papers which were not directly relevant to our work. We searched for articles written in English to avoid inconsistencies related to the language.

Since greenwashing is a multifaceted concept, our search used keywords that would identify all the definitions of this kind of strategy. Starting from the reading of the relevant literature, we recognized that the following terms were widely used: “greenwashing”; “green-washing”; “greenwash”; “green-wash”; “green strategies”; “green washers”. To include all the uses of these terms, we chose the root-words “green” and “wash” in the title, the abstract, and the keywords.

The application of the above criteria resulted in a first extraction of about 335 articles. Using this full set, we started selecting by excluding the papers that are not incorporated in the list of Chartered ABS Journals and those not pertinent to greenwashing from management and from business administration perspectives. These further criteria left us with a set of 59 articles. Nine of these articles, although they were broadly relevant to the topic, were not useful for the purpose of our study because they did not include the issues we aimed to consider in our review. Therefore, the final number of papers was 50.

Specifically, we set up the literature analysis to collect, among the other information, definitions of greenwashing in recent research, to individuate the relevant pillars (milestones), the research questions these papers investigated, the theories they drew on, and the emerging issues regarding the relation between greenwashing and value drivers.

To finalize the literature review, we carefully read all pertinent papers to determine which components should be examined, and we eventually settled on the list of four given in Table 1 below. Aiming to classify the papers according to the component(s) they analysed, we found several intersections because some papers included more than one issue. For instance, four papers included all the clusters, while other articles included one, two, or three of them, as Table 1 shows.

Our analysis of greenwashing literature shows several possible aspects that should be investigated or that are still unclear.

A primary question concerns the conceptualization of this phenomenon. On the one hand, scholars mention that research on symbolic corporate environmentalism and greenwashing is currently still scant (Martín-de Castro et al., 2017 ; Testa et al., 2018b ) and that there is evident risk of investigating greenwashing in an overly simplistic way (De Jong et al., 2020 ; Gatti et al., 2021 ) or without a strong and reliable theoretical foundation (Lyon & Montgomery, 2015 ). Also, most of the extant studies observe greenwashing in its relation to stakeholders and their perceptions (Torelli et al., 2019). For this reason, research regarding the companies’ perspective needs greater attention (Gatti et al., 2021 ). At the same time, the European supervisory authorities need for appropriate definition of greenwashing that can be used in the EU regulatory framework.

The literature analysis was instrumental in delineating the scope of our theoretical investigation. Our review gave insight regarding the direction in which greenwashing should be oriented and organized within a strong theoretical framework (Fig. 1 ) with the following components: (1) the institutional background related to the issue of greenwashing and possible links to corporate governance; (2) the greenwashing concept that we realize by categorizing the several definitions of greenwashing into “orienting pillars” on which we build in defining a construct for a comprehensive and organized view on the most pertinent greenwashing features; (3) the conceptual organization and recognition of the main theories capable of explaining greenwashing and motivating greenwashers’ behavior (Delmas & Burbano, 2011 ), thus supporting research devoted to this issue; (4) the definition of a potential link between greenwashing, reputational capital and relational capital, and a broad concept of value that includes its social dimension. In fact, the effects of greenwashing strategies should be matched with the expansion of the boundaries of the concept of value. Our aim overall, therefore, is to draw a connecting line that will link greenwashing and value, thereby proposing our framework as a tool for developing future research.

Research design

3 The role of institutional background and of corporate governance issues

Greenwashing strategies and their intensity could be better understood by considering underlying matters regarding two important issues, namely the institutional context (external factors related to a given country and its social actors) and the corporate governance (a company-related factor) (Velte, 2022 ).

Greenwashing is a disclosure-based strategy (Lee & Raschke, 2023 ; Seele & Schultz, 2022 ; Seele & Gatti, 2017 ; Cooper et al., 2018 ) that might depend on certain external conditions, incentives, or pressures that characterize the institutional context in which these strategies are used (Zharfpeykan, 2021 ; Velte, 2022 ; Marquis et al., 2016 ; Seele & Schultz, 2022 ; Li et al., 2023 ) or that are shared within the global context. Mostly, companies aim to conform to the institutional context to which they belong, which is composed of a social system, legislation, and the norms and rules that govern firms’ activities (Guo et al., 2017 ). In fact, firms fear the reputational damage they might suffer from a transgression of global environmental norms and, consequently, they deceptively moderate their disclosure intending to address the reputational threat (Marquis et al., 2016 ).

Very many international institutions aim to promote sustainable development. Focusing on the foremost international agreements, which have been defined in the second decade of the 2000s, a set of “milestones” of the logic underlying the ESG commitment can be identified (Table 2 ).

The first milestone was stipulated in 2015 in an agreement signed by all 193 countries of the United Nations, i.e., the “2030 Agenda for Sustainable Development,” which defines the 17 Sustainable Development Goals (SDGs) to be achieved by 2030. One of the sustainable development targets the United Nations identified refers to reporting, specifically encouraging companies to disclose information that demonstrates their commitment to sustainability.

Also in 2015, 195 members of the “United Nations Framework Convention on Climate Change” signed the Paris Agreement, which took effect in 2016 and aimed to strengthen the global response to the risk of climate change.

Further, in 2018, the European Commission drafted the EU Sustainable Finance Action Plan of which the main objective was to incentivize the financing of sustainable activities, to include sustainability in risk management systems, and to foster increasing transparency in reporting these issues. Therefore, this Action Plan helped to implement the Paris Agreement and the 2030 Agenda. Particularly, one of its actions resulted in the creation of EU brands for so-called “green” financial products, to signal investment opportunities that are aligned with environmental criteria which investors should therefore consider. This generated a classification system for sustainable activities, known as the “EU Taxonomy” which, among other things, had some effects on reporting quality. To achieve a better basis of comparison than before, the taxonomy redefined environmental reporting according to a logic of accountability, which is as broad and standardized as possible. It, therefore, represents a deterrent to greenwashing and defines a model for evaluating corporate strategies according to a perspective oriented toward sustainability.

In 2019, the European Commission announced the European Green Deal, which defined some measures, including actions aimed at reducing CO 2 emissions responsible for climate change by the year 2030, and at eliminating those emissions by the end of 2050. Together with the 2030 Agenda, the European Green Deal has promoted a strong push to facilitate reliable reporting on the reduction of greenhouse gas emissions.

Although requirements regarding mandatory disclosure have been increased in recent years, the literature claims that mandatory environmental disclosure is still scant (Mahoney et al., 2013 ). In fact, mandated reporting requirements appear to constrain the propensity to divulge misleading information (Perera et al., 2019 ).

Among the few cases of mandatory reporting requirements, the Task Force on Climate-related Financial Disclosures (TCFD) realized by the Financial Stability Board in 2015 deserves attention. In the absence of conventional international climate-related reporting standards, this group aims to create a set of voluntary disclosure indicators regarding climate-related risks (Brooks & Schopohl, 2020 ). The TCFD drives companies to give answers regarding risks and opportunities related to climate change (Dye et al., 2021 ; Seele & Shultz, 2022 ). Although originally issued as a voluntary information set, in 2021 the TCFD regulations became mandatory for the UK’s financial services sector (Reilly, 2021 ).

Focusing on the European context, the current regulatory setting related to sustainability disclosure is based on several regulations, of which the first is Directive 2014/95/EU of the European Parliament and of the Council, which took effect in 2017, and which is mandatory only for specific categories of companies. This Directive introduced the requirement for some large companies to include a non-financial disclosure in the management report, concerning the ESG factors, which are considered relevant regarding the activities and the company characteristics.

Next, in 2019, Regulation n. 2088 of the European Parliament and of the Council was issued. It represents a new Sustainability-related Financial Disclosure Regulation, which came into force in the second quarter of 2021, requiring mandatory disclosure by fund managers on how they integrate sustainability in investment processes and contain potentially adverse impacts of investments on achieving sustainability goals. This regulation also introduced the distinction between “products” that simply promote environmental or social characteristics (Article 8) and “products” that aim to ensure sustainable investments (Article 9).

The EU directive 2022/2464, in force since January 2023, took on a crucial role regarding corporate sustainability reporting (CSRD) that substitutes the Non-Financial Reporting Directive with “sustainability information”. Significantly, this innovation underlines that information on sustainability cannot be qualified as non-financial and it invites companies to consider the impact sustainability considerations have on their financial plan; thus, financial disclosure and ESG disclosure processes are suitably aligned. Also, this Directive eliminates the likelihood of disclosing CSR separately from the financial report. Separate reporting is directed at different groups of stakeholders, while integrated reporting addresses investors. If the company includes sustainability information in the integrated report it signals that they consider it useful for stakeholders, shareholders (Velte, 2022 ), and for civil society actors. Additionally, in this way sustainability information will be subject to assurance and double materiality analysis.

Before the 2022 EU Directive, various standard-setting institutions, such as the Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI), already promoted the development of sustainability disclosure by providing a set of sustainability accounting standards (Bini et al., 2018 ; Yu et al., 2020 ; Dye et al., 2021 ; Lashitew, 2021 ; Laufer, 2003 ). Even so, until now specific mandatory requirements and their enforcement are still lacking. For this reason, stakeholders have not been able to fully assess the quality and the truthfulness of companies’ environmental claims.

By gradually applying the CSRD to a broader set of companies, enforcing the effectiveness of the sustainability report standards could be facilitated. In fact, the CSRD has designated the European Financial Reporting Advisory Group (EFRAG) to issue the Sustainability Reporting Standards, which will become mandatory for EU companies in the next few years.

Despite such recent improvements, scholars find that environmental disclosure is not widely audited (Yu et al., 2020 ; DeSimone et al., 2021 ). Further, voluntary disclosure can be done strategically to communicate misleading environmental claims (Zharfpeykan, 2021 ). This could give rise to information asymmetries and, consequently, foster greenwashing strategies (Gugerty, 2009 ).

Several sources, such as annual reports, corporate social responsibility reports (i.e., sustainability reports, environmental reports, etc.), the mass-media, or websites (Dye et al., 2021 ; Mahoney et al., 2013 ) transmit voluntary disclosure regarding environmental commitment. In fact, as Mahoney et al. ( 2013 ) found, in the absence of mandatory environmental disclosure, the amount of information voluntarily disclosed depends also on the pressure stakeholders exert on the companies (Lee & Raschke, 2023 ). However, when mandatory requirements are scant or weak, stakeholders are not able to estimate whether a firm is really committed to environmental issues. In their recent study, Li et al. ( 2023 ) strongly emphasize the relevance of regulations and of the so-called social scrutinizers, also in weakening the positive relationship between greenwashing and financial performance.

Since the regulatory environment is a fundamental determinant of greenwashing (Li et al., 2023 ; Delmas & Burbano, 2011 ), the lack of mandatory requirements allows companies to report only useful information that is considered good in sustainability terms. Consequently, the quality of environmental disclosure is very variable across different companies and properly understanding whether information is trustworthy or not, is not fostered among stakeholders. This creates a favorable context for accomplishing greenwashing legitimization strategies, since stakeholders rely on the signaling power of disclosure (Yu et al., 2020 ). In fact, as Khan et al. ( 2021a , b) state, disclosure regarding sustainability has recently been criticized for being “opportunistic, “green washing”, implausible, cosmetic, lacking in stakeholder inclusivity, lacking in “authentic effort” and failing to meet users’ expectations” (p. 339), and largely unreliable. Since voluntary disclosure on environmental issues is a strategic tool for companies to answer to stakeholders’ pressure and to achieve legitimation, it could be lacking in reliability (Lashitew, 2021 ).

Greenwashing is related to Corporate Social Responsibility (CSR), defined in the literature as “a model of extended corporate governance whereby those who run a firm (entrepreneurs, directors and managers) have responsibilities that range from fulfillment of their fiduciary duties towards the owners to fulfillment of analogous fiduciary duties towards all the firm’s stakeholders” (Sacconi, 2006 , p. 262). This perspective on businesses’ social responsibility incorporates sustainability into a broader view of corporate governance (DeSimone et al., 2021 ), which includes the influence managers exert, as well as how the relationship between owners and managers affects their firms’ sustainability behaviors (Fiandrino et al., 2019 ; Jain & Jamali, 2016 ). This view further includes the mechanisms that regulate the fiduciary relationships which engage stakeholders and influence companies’ reputation (Li et al., 2023 ), even in terms of environmental sustainability (Fiandrino et al., 2019 ).

The link between corporate governance, management, and greenwashing, as we explain more elaborately below, can be observed through several lenses, such as the role of disclosure-based strategies, the governance control mechanisms, and the accusation element. Further, it should be noted that greenwashing strategies and their intensity, among other things, can depend on firm-related factors, external stakeholders’ pressures or awareness, or institution-related and country-related factors (Velte, 2022 ).

The literature sheds light on possible institutional features, as well as specific corporate governance attributes capable of impacting on the disclosure quality, and therefore also on reporting-related strategies, such as greenwashing. Velte ( 2022 ) observes some context-related issues that enlighten us on the stakeholders’ influence and involvement in corporates decisions. In fact, he states that operating within a civil regime means that a stakeholder’s perspective is adopted. Further, the degree of stakeholders’ influence on firms’ compliance and on their boards of directors can strengthen the investors’ protection rules (Jamali et al., 2008 ). In addition, the institutional context can be characterized according to the level of scrutiny and the kind of pressure certain social actors such as NGOs, consumers, investors, environmental groups (Kim & Lyon, 2011 ; Marquis et al., 2016 ; Testa et al., 2018a a; Seele & Schultz, 2022 ) exert. Such actors can impose their own supervision by introducing their own mandated disclosure requirements or monitoring actions, which the regulatory environment will carry out (Delmas & Burbano, 2011 ).

That greenwashing is a pertinent matter is evident from observing how regulators pay attention to it. In fact, European regulators have already signaled a willingness to take enforcement action in cases of greenwashing. For instance, in 2022 the European Securities and Markets Authority (ESMA) established that the national regulators should enforce actions devoted to countering greenwashing. Also, the European Supervisory Authorities (ESAs) published a Call for Evidence on greenwashing to find a clear definition of the phenomenon through developing a deeper understanding of its key-features, its drivers, and the related risks, as well as to shed light on possible practical manifestations of greenwashing. This commitment of the European Supervisory Authorities contributes to new insight on the fact that greenwashing has become a complex and not well-defined phenomenon. The conceptual framework we propose in this complex scenario aims to disambiguate some issues in the path that scholars tread in developing research devoted to sustainability, with a particular focus on greenwashing as an environmental matter.

We recognize the role of corporate governance in a greenwashing analysis by observing several research directions such as greenwashing in disclosure-based strategies, governance control mechanisms, and an accusation element.

Corporate governance drivers, such as the boards of directors, the executive committee, and owners with specific attributes (Ho, 2005 ), are recognized as strong determinants of the reporting quality that, in turn, constrains the risk that companies incur in greenwashing strategies (Velte, 2022 ). For example, both stakeholders and shareholders can foster an improvement of the reporting quality, but at the same time greenwashing can arise from an opportunistic manager’s intent. In fact, both internal and external determinants act in driving or limiting greenwashing. On the one hand, governance bodies such as the board of directors, as well as external stakeholders can constitute a fostering factor for executives who have to implement disclosure strategies. On the other hand, corporate governance mechanisms act as controlling instruments to improve the disclosure quality and therefore to constrain the strategies that build information asymmetries (Velte & Stawinoga, 2017 ).

The link between greenwashing and governance from a control perspective is also clarified by professional accountants and auditors who hold that implementing an ESG governance is a way of constraining greenwashing: “Embed ESG criteria in existing risk management procedures and controls. Consider introducing a bespoke ESG policy. ESG governance can assist the business to follow and have evidence of robust processes to make accurate public statements and claims about how ‘green’ or sustainable their products and services are” (KPMG, 2022 ).

The above considerations suggest a need to observe corporate governance’s role as a firm-level determinant of greenwashing because, due to the control mechanisms that the board of directors can implement, governance can be a possible incentive to disclose legitimation strategies and a possible limit to the disclosure tendency.

Further, greenwashing is a strategy that arises through stakeholder involvement. Specifically, greenwashing results when external interlocutors formulate an accusation (Sutantoputra, 2022 ) or attribute blame (Pizzetti et al., 2021 ). Such accusations, in certain cases, can act as a limiting element, for example, in vigilant environmental NGOs (Berrone et al., 2017 ). In fact Seele and Gatti ( 2017 , p. 239) state that greenwashing is a phenomenon “constituted in the eye of the beholder, depending on an external accusation.” In other words, greenwashing emerges from a path that involves reporting, controls, and strategies, and is a consequence of some form of control. Reporting-related strategies, such as greenwashing, are also strictly linked to the control external interlocutors exercise (Li et al., 2023 ).

4 Perspectives for a greenwashing conceptualization

In the broader context of CSR, the greenwashing concept relates specifically to the environmental responsibility of a firm (Pearson, 2010 ). Greenwashing arises as firms are increasingly being requested to commit to environmental issues, and is fostered by the difficulties stakeholders encounter in directly evaluating a firm’s environmental performance (Berrone et al., 2017 ; Pizzetti et al., 2021 ). Due to these difficulties, firms can afford to communicate non-transparent information about their environmental performance.

As research on greenwashing is growing, several greenwashing-related issues will be developed. However, different scholars portray different meanings of greenwashing (Walker & Wan, 2012 ; Seele & Gatti, 2017 ; Zharfpeykan, 2021 ) and, currently, there is no generally accepted understanding of the concept (Torelli et al., 2020 ; Wu et al., 2020 ). There are several definitions of greenwashing that are grounded in different perspectives, which is due also to greenwashing being multifaceted (Lyon & Montgomery, 2015 ) so that an interdisciplinary perspective is fostered (Seele & Gatti, 2017 ; Torelli et al., 2020 ; Zharfpeykan, 2021 ).

The above features of the greenwashing phenomenon suggest a lack of homogeneity, which leads to the first step in developing our framework. We propose a conceptual scheme to orient scholars and authorities toward understanding the multifaceted features of greenwashing.

The origins of the concept greenwashing can be traced back to a study by the environmentalist and biologist Jay Westervelt, published in 1986 (De Freitas Netto et al., 2020 ), at a time when the first environmental controversies began to arise. In his essay, Westervelt accused firms operating in the hospitality sector of encouraging the reuse of towels, ostensibly to promote green policies; however, at the time he noticed that hospitality sector firms, in fact, did not promote serious environmental policies (Pearson, 2010 ; Seele & Gatti, 2017 ).

Greenwashing is considered “an umbrella term for a range of corporate behaviors that induce investors and others to hold an overly positive view of the firm’s performance” (Cooper et al., 2018 , p. 227). Academics have, therefore, adopted various perspectives in defining the phenomenon of greenwashing (Torelli et al., 2020 ; Yu et al., 2020 ). Despite the differences in interpretation, the literature largely considers the definitions that scholars have formulated to be consistent with each other (Zharfpeykan, 2021 ).

We propose a conceptualization that polarizes the several definitions of greenwashing into some “orienting pillars.” Our literature analysis reveals that among the several definitions of greenwashing a number of recurring features can be recognized. In other words, most of the existing and recent definitions can be traced back to ones that identified the basic pillars. We aim to organize these basic pillars to define a construct that affords a wider and organized view on the possible features of greenwashing. All the conceptualizations of greenwashing have a common root in their use of disclosure as a tool to realize these strategies.

The first perspective we put in evidence, refers to omissions in reporting on the reality. The literature recognizes this as “selective” disclosure. In reporting a company’s activity, two possible kinds of behavior represent selective disclosure (Crifo & Sinclaire-Desgagné, 2013 ), namely to withhold information on negative environmental performances and/or to enhance the positive environmental performances disproportionately (Lyon & Maxwell, 2011 ; Guo et al., 2017 , Torelli et al., 2020 ; Delmas & Burbano, 2011 ; Du, 2015 ; Marquis et al., 2016 ). Lyon and Maxwell’s ( 2011 ) definition is among the most widely recognized ones, describing greenwashing as “the selective disclosure of positive information about a company’s environmental or social performance, without fully disclosing the negative information on these dimensions, so as to create an overly positive corporate image” (p. 9). In other words, Lyon and Maxwell’s perspective considers greenwashing as an asymmetric communication that aims to report a company’s environmental successes, while hiding poor commitment or negative behavior (Ferrón-Vílchez et al., 2020 ). This perspective includes a stream of research that considers this kind of greenwashing as “cheap talk” (Cooper et al., 2018 ), incomplete disclosure (Martinez et al., 2020 ), and an intrinsic feature (Lee & Raschke, 2023 ). Also, this research stream sees omissions as a manipulation strategy (Cho et al., 2022 ) which paves the way for the second perspective of a greenwashing definition. In fact, quite close to the concept of selective disclosure, is the one of misleading disclosure (Delmas & Burbano, 2011 ; Du, 2015 ; Pope & Wæraas, 2016 ; Seele et al., 2017; Guix et al., 2022 ; Lee & Raschke, 2023 ). Laufer ( 2003 ) described CSR disclosure, to which disclosures regarding environmental performance and initiatives belong, as devious and insincere. This suggests that greenwashing results not only from “omissions” but also from “lies” in the form of false green reporting (Seele & Gatti, 2017 ) that shows an untruthful image of a company’s green behavior (Mitchell & Ramey, 2011 ). Consistent with this perspective, prior literature associates greenwashing with fraud, assuming that misleading claims are intentionally finalized to generate a damaging image/experience for readers (Kurpierz & Smith, 2020 ).

A third perspective focuses on the gap between what companies report and what they do. This happens when companies ‘don’t walk the talk’ (Berrone et al., 2017 ). This approach regards greenwashing as a lack of substance concerning what has been accomplished (Siano et al., 2017 ). Consistent with this view, Walker and Wan ( 2012 , p. 231) define greenwashing as “ symbolic information emanating from within an organization without substantive actions. Or, in other words, discrepancy between the green talk and green walk .” Walker and Wan’s ( 2012 ) concept of greenwashing diverges from “green highlighting” because, while the former stems from a gap between actions and reporting (Lyon & Montgomery, 2015 ), the latter is backed by substantive acts, although they select only the good performances for the report. However, both these strategies can produce stakeholder reactions, potentially resulting in reputational damage or in increased reputational risk (Gatzert, 2015 ). Prior literature proposed perspectives that highlight the relationship between the different pillars generating a construct, which involves more than a specific greenwashing feature.

Starting from the common concept of deception, Gatti et al. ( 2021 ) identified four possible ways of pursuing greenwashing strategies, which involve the abovementioned fundamental greenwashing features. Greenwashing can arise at the action level or at the communication level. The fundamental features of “selective-disclosure” and the “misleading-disclosure” arise when the respective strategy is pursued through communication. The first when deception is passive, the second when deception is active.

The action level of greenwashing suggests an additional consideration, asking whether greenwashing is a disclosure-based strategy at all. The symbolic form of greenwashing, introduced above, becomes manifest in active deception regarding greenwashing, which Gatti et al. ( 2021 , p. 229) identify as happening when “(t)he company manipulates business practices to support its environmental communications.” Although such typology belongs to the action level, we see the manipulation of the business practices as a way of fostering positive but inconsistent reporting, thus including disclosure as an ultimate tool for greenwashing strategies. The action-level, associated with a passive form of deception, generates an additional feature of greenwashing, namely attention diversion. Attention diversion occurs when companies carry out green initiatives intended to be disclosed, while aiming to conceal other critical issues.

The literature recognizes that the extent of greenwashing, as well as its results, reflects some characteristics of the institutional background within which companies operate (Berrone et al., 2017 ; Delmas & Burbano, 2011 ). With this in mind, we complete our conceptual vision of greenwashing by giving the perspectives some important actors in the social environment, such as non-governmental organizations (NGOs), have adopted. Since these actors actively scrutinize and monitor companies (Lee & Raschke, 2023 ), greenwashing might not be a successful strategy for them if they operate in the presence of vigilant environmental NGOs. These organizations might constrain the effects companies hope to achieve through greenwashing (Berrone et al., 2017 ). Two of the most important environmental NGOs, Greenpeace and TerraChoice, in their definition of greenwashing, emphasize a relational aspect that involves the customers and the products. Greenpeace defines greenwashing as “a public relation tactic that’s used to make a company or product appear environmentally friendly without meaningfully reducing its environmental impact” (Greenpeace, 2021 ), while TerraChoice defines greenwashing as “the act of misleading consumers regarding the environmental practices of a company or the environmental performance and positive communication about environmental performance” (TerraChoice, 2007 ). The perspectives these two NGOs definitions take offer a vision of greenwashing that is consistent with both the misleading and the symbolic pillars.

The background of greenwashing perspectives that we have represented sheds light on an important question to be addressed in future research: Can green communication also involve unethical or illegal behavior? (Siano et al., 2017 ). Indeed, considering greenwashing as the result of a selective or deceptive form of communication opens this concept to the possibility of including criminal or irresponsible environmental behavior, while adopting an interpretation of greenwashing as mere symbolic disclosure highlights the question of the inconsistency of companies’ reporting.

These considerations open up a further possible interpretation of greenwashing that places it between “decoupling” and “attention deflection” (Siano et al., 2017 ). Consistent with the concept of symbolic environmental disclosure, decoupling (Siano et al., 2017 ; Walker & Wan, 2012 ; Guo et al., 2017 ; Pizzetti et al., 2021 ) occurs when companies communicate good environmental actions to satisfy stakeholders’ needs and expectations without having adequate, structured, and organized activities, even to achieve their own objectives (Meyer & Rowan, 1977 ; Bromley & Powell, 2012 ). Attention deflection , on the other hand, aims to conceal irregular or unethical environmental behaviors (Marquis & Toffel, 2012 ) while reporting about symbolic “green behaviors.” Decoupling and deflection are both strategies that give communication a predominant role over action.

The background of the greenwashing definitions suggests some common attributes of these kinds of strategies. First, the literature has emphasized that greenwashing exists if this kind of environmental reporting is intentional (Torelli et al., 2020 ; Ferrón-Vílchez et al., 2020 ; Gatti et al., 2021 ). Further, a number of scholars (e.g., Seele and Gatti, 2017 ) pointed out that greenwashing should, by definition, be linked to an explicit accusation coming from the media, the stakeholders, and society. Then, an accusation would be a crucial determinant of greenwashing.

In that sense, greenwashing depends on both a company-related factor, identified by the level of misleading information that the firm provides, and on a relational factor, represented by the accusation that results from the stakeholders’ perception of the misleading intention.

The analysis of greenwashing conceptualization that we have developed leads to a structuring of this theorization that aims to provide a concept that allows us to define an inclusive and complete overall vision of a multifaceted umbrella concept (Cooper et al., 2018 ; Roulet & Touboul, 2015 ).

To frame the concept of greenwashing, scholars have identified several cornerstones of its definition (e.g., Bowen, 2014 ; Seele and Gatti, 2017a , b ; Ferrón-Vílchez et al., 2020 ). Following Delmas and Burbano ( 2011 ), greenwashing results from simultaneous bad environmental performance and positive environmental disclosure. However, in a further step, scholars identified the following three propositions as determinants (Bowen & Aragon-Correa, 2014 ): (1) corporate disclosure is selective, (2) greenwashing is a deliberate behavior (Mitchell & Ramey, 2011 ), which therefore determines an intentional deceit for stakeholders (Nyilasy et al., 2014 ), and (3) greenwashing starts from the willingness of the company that manages this strategy. Subsequently, we identify another crucial determinant of greenwashing: how the stakeholders perceive it (Seele & Gatti, 2017a , b ). This aspect not only allows us to go beyond the company’s behavior, shedding light on the external environment’s active role in identifying the extent of the greenwashing effect, but also, at the same time, in identifying its motivations. According toSeele and Gatti ( 2017a , b ), greenwashing occurs if disclosure is misleading and if stakeholders accuse the company of being deceptive. The above pillars of greenwashing explain a number of crucial aspects to be investigated with a view to managing environment-focused research.

First, disclosure is considered the main tool in realizing greenwashing strategies on which companies deliberate and that they manage. Further, as Seele and Gatti ( 2017 ) highlighted, greenwashing implies two perspectives for observing the phenomenon. The first perspective is related to the information that a company would like to disclose, and to the extent of the disclosure’s potential misleading effect. The second perspective is related to the external perception of this information that could result in an accusation of falsity or omission.

The above considerations deserve further clarification. As highlighted, greenwashing is a strategy based on a company’s relationship with its stakeholders. However, Ferrón-Vílchez et al. ( 2020 ) point out that greenwashing does not in every case stem from a company initiative, and they elucidate the role of the large set of stakeholders that are interested in companies’ environmental responsibility, i.e., in their compliance with the legal obligations or the need to achieve environmental certifications (Sutantoputra, 2022 ). In that perspective, greenwashing can be interpreted not only as a strategy pushed by companies but also as an effect pulled by stakeholders. Consistent with this second view, Ferrón-Vílchez et al. ( 2020 , p. 862) define greenwashing as “a group of symbolic environmental practices born in response to the stakeholders’ pressures.”

Different levels of greenwashing actions stem from the above definition. In a first step, scholars (e.g., Delmas & Burbano, 2011 ) defined two greenwashing levels (Yu et al., 2020 ; Zharfpeykan, 2021 ) and in a further development of the analysis, Torelli et al. ( 2020 ) added two more levels. Company-level greenwashing is grounded in symbolic (Wong et al., 2014 ), selective, or misleading (Torelli et al., 2020 ) environmental disclosure, regarding the company’s mission, its certification, and other corporate-related issues capable of influencing its reputation. When the misleading “green communication” relates to the firms’ intentions for future strategies, the level of greenwashing is defined as strategic and can consist of disclosing the long-to-medium term objectives regarding the environmental aspects of the company’s activities. Some scholars (Torelli et al., 2020 ) also identified a dark level of greenwashing, which occurs when misleading or selective (Marquis et al., 2016 ) environmental disclosure aims to conceal illegal behavior. In our opinion, this form of communication could be applicable in all levels of greenwashing, when the company aims to hide illegal actions that enable several strategic or operational activities. Finally, product-level greenwashing relates to the information that a company discloses to promote its products and their environmental peculiarities. Product-level greenwashing occurs when this information is not fully truthful or complete (Delmas & Burbano, 2011 ).

The above considerations suggest that greenwashing can be viewed as a deliberate strategy (Seele & Schultz, 2022 ) involving different aspects of the companies’ activity. The deliberate strategy is realized through using different kinds of corporate disclosure (selective, misleading, false, and so on) or through actions that aim to enhance symbolic disclosure or to divert attention (Gatti et al., 2021 ). Further, among other things, the deliberate strategy aims to improve or repair the company’s reputation and image as perceived by stakeholders (Bowen & Aragon-Correa, 2014 ; Delmas & Burbano, 2011 ; Ferron-Vilchez et al., 2020 ). The objective is to obscure illegal actions or corporate scandals (Torelli et al., 2020 ) or to foster financial and market performances and companies’ valuations (Yu et al., 2020 ; Montero-Navarro et al., 2021 ) (Fig. 2 ). However, scholars explain that external stakeholders can become aware of greenwashing strategies, thus generating skepticism and undermining the company’s reputation (Bowen & Aragon-Correa, 2014 ).

Greenwashing: a conceptual vision. Source: Author’s own elaboration

5 In search of an explanation for greenwashing: what theories do scholars recall?

An observation of the greenwashing drivers is not fully possible without considering both the theories supporting and explaining these firms’ behaviors and the role of non-financial disclosure as the main tool that companies use to realize the above strategies (Seele & Schultz, 2022 ). In recognizing the main theories that support the greenwashing studies we aim to define a conceptual structuring capable of explaining firms’ motivations and behaviors, and of supporting greenwashing research.

In business economics studies, theories arise from several disciplines belonging to the social sciences. They help us not only to understand particular human and corporate behaviors but also to define the framework for studying such behaviors.

Several scholars (Walker & Wan, 2012 ; Laufer, 2003 ; Zharfpeykan, 2021 ; Seele & Gatti, 2017 ; Uyar et al., 2020 ; Ferrón-Vílchez et al., 2020 ; Dye et al., 2021 ; Mitchel & Ramey, 2011 ) have defined a theoretical framework for understanding greenwashing. These frameworks include, among other things, legitimacy (Oliver, 1991 ), signaling theory, stakeholder theory, competitive altruism theory (Barclay, 2004 ; Hardy & Van Vugt, 2006 ), and discretionary disclosure theory (Verrecchia, 1983 ) (Table 3 ).

5.1 The legitimacy theory

Legitimacy theory (Deegan et al., 2002 ) is grounded in the concept of legitimacy (Cuganesan et al., 2007 ) that, in a broad definition, can be viewed as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman, 1995 , p. 574). Walker and Wan ( 2012 ) explain that legitimacy stems from the assumption that the socially accepted rules or values represent the setting in which corporate behaviors should be considered appropriate (Suchman, 1995 ) from the perspective or judgement of this social setting’s actors (Bitektine, 2011 ). In other words, legitimacy theory, that belongs to the macro‑level theories (Seele & Shultz, 2022 ), defines a contract between the company and its stakeholders (Deegan et al., 2002 ; Deegan & Unerman, 2011 ; Gatti et al., 2021 ). On the one hand, the contract requires companies to behave properly, and, on the other hand, it legitimates those companies that appear to be compliant with formal or informal social rules (Zharfpeykan, 2021 ). In this regard, Roberts ( 1992 ) considers legitimacy not only as a tool to improve financial or social performance (Deephouse, 1999 ) and companies’ value but also as a survival condition. In fact, stakeholders’ legitimation gives companies greater opportunity to obtain resources and financing, and it facilitates the relationships in the competitive system (Walker & Wan, 2012 ; Seele & Gatti, 2017 ).

Since CSR initiatives, including companies’ environmental efforts, should be considered as new legitimacy determinants (Seele & Gatti, 2017 ; Berrone et al., 2017 ; Hahn & Lulfs, 2014 ), the greenwashing strategies can be framed within legitimacy theory as a form of seeking legitimation which they found on misleading disclosure (Velte, 2022 ; Lee & Raschke, 2023 ; Li et al., 2023 ).

Legitimacy studies (Scherer et al., 2013 ; Bitektine, 2011 ; Suchman, 1995 ) identify several types of legitimacy. Among the different interpretations, we briefly mention three possible classifications and aspects that can help to interpret the phenomenon of greenwashing (Bowen, 2019 ; Seele & Gatti, 2017 ). Suchman ( 1995 ) defined cognitive legitimacy, pragmatic legitimacy, and moral legitimacy (Seele & Lock, 2015 ). Cognitive legitimacy occurs when environmental culture is taken for granted. Moral legitimacy stems from normative approval (Zyglidopoulos, 2003 ) and is related to how a society evaluates the company’s behavior (Bitektine, 2011 ). Pragmatic legitimacy is based on self-interest evaluations of the company’s stakeholders and on their perceptions of the advantages they can gain from firm activities (Seele & Gatti, 2017 ; Shuman, 1995).

Further, legitimacy has been classified as internal if it concerns a company’s insiders, or external if it concerns an external audience (Bitektine, 2011 ; Kostova & Roth, 2002 ). In a greenwashing analysis, an external perspective of legitimacy would be more useful than an internal one.

Adopting the legitimacy theory lens to analyze greenwashing as previously defined, implies a focus on pragmatic legitimacy. This is consistent with Seele and Gatti’s ( 2017 ) analytic framework, which links research on pragmatic legitimacy to the intentional misleading scope of green disclosure and adopts a strategic approach (Scherer et al., 2013 ) to legitimacy (Pfeffer, 1981 ). Following the framework given above, Seele and Gatti ( 2017 ) recognized that disclosure regarding green and environmental issues is a strategy aimed at gaining and improving legitimacy (Cho et al., 2022 ) or at reconstituting a compromised legitimacy (Laufer, 2003 ; Deegan et al., 2002 ). The strategic approach considers legitimacy as an operational resource that companies obtain from the cultural setting in which they operate (Suchman, 1995 ). In this theoretical framework, greenwashing consists of a legitimation strategy, adopting environmental disclosure to “legitimate social and environmental values which may or may not be substantiated” (Mahoney et al., 2013 , p. 352).

Legitimacy is also interpreted in institutional studies (Suchman, 1995 ), which consider it as a set of “constitutive beliefs” (Suchman, 1988 ). In this perspective, legitimacy is not regarded as a resource extracted from the social environment but as something that arises from an external institution’s construct (Suchman, 1995 ). As Bowen ( 2019 ) states, an institutional approach suggests that the companies’ behaviors aim to reach social approval. Also, the change observed in the stakeholders’ expectations pushes companies to adapt their strategy and their disclosure to comply with current societal expectations (Cuganesan et al., 2007 ). In that sense, the increased consciousness of environmental issues and the related disclosure can be considered as a form of adapting the company’s behavior to comply with the perceptions and expectations the social system’s actors have (Hahn & Lulfs, 2014 ). Research framed in an institutional theory perspective, sheds light on the relevant role of the social environmental context, such as norms, regulations and cognitive factors, which influence companies’ organizational practices (Delmas & Burbano, 2011 ). The role of the regulatory context as a greenwashing driver should to be seen in association with the other external factors and internal conditions, so that we can define their behavior as an adaptation prompted by all these factors’ pressure. This point of view, which is related to organizational institutionalism, adds a meso-level perspective of investigation to the theoretical background (Seele & Shultz, 2022 ).

5.2 The stakeholder theory

In the same way as legitimacy theory, stakeholder theory (Freeman, 1994 ) is another socio-political theory (Gray et al., 1995 ; Uyar et al., 2020 ) scholars have adopted to explain greenwashing practices (Velte, 2022 ). Stakeholder theory refers to the concept of stakeholder engagement, defined by Sharma and Vrendenburg ( 1998 ) as “the ability to establish trust-based collaborative relationships with a wide variety of stakeholders” (p. 735). Stakeholder theory indicates that the stakeholders’ involvement in the companies’ decisions has a dual purpose. The first is to fulfill the ethical requirements in accordance with the societal norms, and the second is to strategically manage the relational capital (Edvinson & Malone, 1997 ; Stewart, 1997 ). Both these purposes are instrumental in achieving a competitive advantage (Cennamo et al., 2009 ; Seele & Shultz, 2022 ).

The stakeholders’ engagement (Sacconi, 2006 ) assists in overcoming the financial performance’s boundaries to include the achievement of social performance. In that sense, accountability includes both kinds of performance (Guthrie et al., 2004 ), extending the concept of financial value toward that of social value (Dumay, 2016 ).

Corporate environmental performance fits in the perspectives of both the legitimacy theory and the stakeholder theory, because the societal expectations about the “green behavior” of a company increase over time and encourage firms to reach legitimacy and satisfy the stakeholders’ requirements. Environmental efforts may therefore also be considered as a company’s adaptive behavior to fulfill the above-mentioned requirements and toward the stakeholder pressure (Ferrón-Vílchez et al., 2020 ; Murillo-Luna et al., 2008 ). Since external pressure is considered to be the most effective driver of an environmental commitment (Seele & Schultz, 2022 ; Velte, 2022 ), it may be difficult to discern whether the real determinant of companies’ green efforts is a moral attitude or a reaction to the stakeholders’ pressure (Crifo & Sinclair-Desgagné, 2013 ).

5.3 The signaling theory and a glance at other theories

The signaling theory, which is widely used to explain greenwashing strategies, also emphasizes the crucial role of disclosure. Drawing on voluntary disclosure theory (Clarkson et al., 2008 ), signaling theory (Mahoney et al., 2013 ) explains that, since corporate disclosure reduces information asymmetries (Berrone et al., 2017 ), it can contribute to increase corporate valuations, considered both in a financial and in a social meaning (Michelon & Parbonetti, 2012 ; Dumay, 2016 ). In fact, disclosure regarding environmental responsibility is a signal of companies’ commitment to these issues, which makes stakeholders aware that the company’s behavior is congruent with their expectations. However, in the case of greenwashing, the signaling power of the voluntary disclosure stems from information asymmetries.

Seele and Gatti ( 2017 ) favor signaling theory to explain greenwashing, because signaling theory makes it possible to observe both how the message is sent and how it is received and interpreted, in the presence of information asymmetries. In that perspective, Seele and Gatti motivate why misleading “green disclosure,” formulated to show a commitment to environmental issues, can (falsely) “signal” corporates’ positive social values (Connelly et al., 2011 ). They assume that disclosing positive information regarding green behaviors is convenient for both good and bad environmental performers. In a signaling theory perspective, every company can choose whether to disclose or not disclose truthful information about its “green” performance (Connelly et al., 2011 ; Yekini & Jallow, 2012 ). Taking this into account, that companies are keen to gain legitimacy (Lee & Raschke, 2023 ) represents a strong incentive for bad environmental performers that can use information asymmetries to signal a misleading message in terms of good environmental behaviors, thus acting as greenwashers . According to signaling theory, companies with superior environmental performance show a higher propensity to voluntarily divulge that environmental behavior, when compared to bad performers (Mahoney et al., 2013 ). Signaling theory differs from legitimacy and stakeholders’ theories in this sense, because stakeholders assume that disclosure can be used as a tool to realize greenwashing strategies (Hahn & Lülfs, 2014).

Nevertheless, signaling theory, consistent with a voluntary disclosure perspective (Mahoney et al., 2013 ), is grounded in the reduction of information asymmetries, and scholars believe that external stakeholders do not have the tools to distinguish between true or false information regarding environmental issues (Carlson et al., 1993 ). In such a context, information asymmetries between firms and stakeholders allow greenwashers to signal a positive image of their company (Li et al., 2023 ), thus improving the company’s reputation. Further, legitimacy and stakeholder theories suggest that external stakeholders’ pressure induces bad environmental performers to produce voluntary disclosure regarding “green behaviors” (Patten, 2002 ; Uyar et al., 2020 ).

Other scholars have used the competitive altruism theory to explain greenwashing (Barclay, 2004 ; Hardy & Van Vugt, 2006 ; Mitchel & Ramey, 2011 ). According to this theory, companies (as well as individuals) compete to be considered altruistic, because conveying an image of altruism to outsiders strengthens a reputation of trustworthiness.

Additionally, prior literature gives the agency theory perspective (Jensen & Meckling, 1976 ) in attempting to explain the behaviors of individuals at a micro-level (Seele & Shultz, 2022 ). This perspective opens up a space for research that investigates greenwashing as a corporate governance issue.

Following the first perspective of agency theory that focuses on the owner-manager relations, greenwashing can be analyzed as a tool to promote managers’ interests to the detriment of the shareholders and, in this peculiar case, it also harms other social actors. In this sense, greenwashing could be investigated as a management tool for pursuing self-interest objectives. Greenwashing, as mentioned, is a strategy based on information asymmetries (Lee & Raschke, 2023 ), which are capable of generating agency costs (Ashbaugh et al., 2004 ). It draws attention to the need for a higher level of control on managers’ activities.

Following the second perspective of agency theory regarding control of the owner-minority relations, especially in case of a high concentration of shares, it can be studied as an entrenchment effect output (Bennedsen & Nielsen, 2010 ), where shareholders and managers adopt opportunistic behaviors to the detriment of minorities (Claessens et al., 2002 ). In such cases, the assignment to control should be delegated to the so called “external watchdogs” (Seele & Shultze, 2022 ).

5.4 Conceptual organization of the main theories

Disseminating information regarding green activities is considered a way to enhance corporate reputation (Seele & Gatti, 2017 ; Baum, 2012 ), as well as to enhance revenue and other kinds of financial performance (Deephouse, 1999 ). The search for external legitimacy within a pragmatic approach and stakeholder pressure for compliance with environmental issues (Ferrón-Vílchez et al., 2020 ) could, however, lead companies to use disclosure to gain both legitimacy and stakeholders engagement.

The legitimacy theory perspective (Deegan et al., 2002 ) considers disclosure as a tool for improving the stakeholders’ accountability and reputation (Macias & Farfan-Lievano, 2017 ). Consistently, voluntary “green disclosure” is considered an instrument to engage salient stakeholders by reporting content that is congruent with their values and expectations (Dye et al., 2021 ; Mahoney et al., 2013 ). As Seele and Gatti ( 2017 ) stated, the role of disclosure becomes especially crucial when environmental scandals occur and companies have to repair their image and rebuild trust in corporate behaviors.

The search for pragmatic legitimacy, as well as stakeholder pressure (Gray et al., 1995 ), can bring about strategic uses of disclosure, which impact stakeholders’ perception and generate information asymmetries. This happens with greenwashing, as it is a phenomenon that can be interpreted in a socio-political theoretical perspective, to which legitimacy and stakeholder theories belong (Deegan et al., 2002 ). In fact, legitimacy theory justifies such communication habits, since symbolic, selective, misleading, or false disclosure is useful in concealing events that could threaten corporate legitimacy or in concealing bad environmental events with misleading or symbolic information (Zharfpeykan, 2021 ). Stakeholder theorists (e.g., Ferrón-Vílchez et al., 2020 ) explain the use of misleading disclosure regarding green actions by viewing it as an answer to stakeholders’ need to be involved in and informed about the companies’ activities and, at the same time, as a tool to manage stakeholders as a strategic resource (Cennamo et al., 2009 ).

The motivation to implement greenwashing policies also depends on the features of the institutional context in which companies operate, such as the pollution sensitivity, the sector (De Vries et al., 2015 ; Delmas & Burbano, 2011 ), the legislative measures, and the legal enforcement in the context of a particular country. More stringent regulations regarding environmental behaviors result in stronger pressure on companies (Kim & Lyon, 2015 ). The institutional context, seen both as a set of regulations and as a result of activist groups, is considered a variable capable of impacting greenwashing practices (Delmas & Montes-Sancho, 2010 ; Marquis et al., 2016 ).

In the above-mentioned conceptual framework, Ferrón-Vílchez et al. ( 2020 ) identify both a proactive and a reactive motivation for greenwashing behaviors. These motivations arise from companies wanting legitimation or from a response to external pressure of stakeholders, that aim to generate an external image of the company that is better than the real one, improving the firm’s reputation and ultimately its competitive advantage (Velte, 2022 ; Lyon & Montgomery, 2015 ). This information confirms the pivotal role of disclosure. Disclosure represents an answer to the stakeholders’ need to be informed about corporate activities (Ullmann, 1985 ), with the intent of reducing information asymmetries. At the same time, disclosure represents a legitimation strategy (Deegan et al., 2002 ). In fact, misleading disclosure deliberately generates information asymmetries to induce a positive shareholder perception and to preserve legitimacy (Uyar et al., 2020 ).

The above theories anticipate that stakeholders will punish companies that exhibit bad environmental behavior and, at the same time, they state that disclosing information is costly (Mahoney et al., 2013 ; Uyar et al., 2020 ). In fact, the discretionary disclosure theory (Verrecchia, 1983 ) underscores that, since disclosure comes at a price, managers select the information that should be disclosed. Verrecchia ( 1983 ) also states that the undisclosed information can be interpreted in several ways. This suggests that the external stakeholders are, in any case, not able to attribute a negative connotation to the withheld information and, consequently, cannot discount the company value.

The above considerations explain that the conceptualization of greenwashing that emerges via the theories systematically converges toward a consideration of disclosure, offered through several tools, as a key resource in understanding the greenwashing strategy. This strategy aims to generate an external image of the company that is better than the reality, improving the firm’s reputation and ultimately its competitive advantage (Table 4 ).

6 Proposing a framework for analyzing greenwashing’s economic and social value relevance

Environmental issues are becoming increasingly relevant, therefore companies redefine their behaviors to comply with this crucial matter, also to fulfill an accountability function (Yu et al., 2020 ; Lashitew, 2021 ). However, green behaviors do not follow companies’ ethical values in every instance; they are also consequent to strategic decisions that aim to improve companies’ image and reputation through manipulating the corporate disclosure (Cho et al., 2022 ). We have emphasized the importance, as well as the difficulties, of a greenwashing conceptualization, to develop useful theorization of this issue and to provide tools for operationalizing the phenomenon through designing indicators that can be used in developing academic empirical research. Such indicators are also necessary for monitoring and limiting the greenwashing in which the authorities and regulators engage.

Since various theories have contributed to identify the possible motivations for doing greenwashing, it is now critically important also to observe the consequences of greenwashing behaviors (Berrone et al., 2017 ). This should help companies to rebuild their business model to comply with environmental objectives (Arena et al., 2022 ). This compliance effort would require adequate investments regarding the organizational, structural, and human perspective to accommodate the transversal nature of “greenization.” However, as stated, companies might report on their environmental involvement without really investing in the necessary underlying environmental strategies.

Companies’ commitment to environmental issues is widely recognized as a shareholder value driver and it is also identified as a social value driver (Michelon & Parbonetti, 2012 ). As explained above, reporting about companies’ environmental commitment reduces the information asymmetry between firms and stakeholders and contributes to legitimating firms’ behavior, positively affecting the companies’ value (e.g., Michelon & Parbonetti, 2012 ), in both its financial and social dimensions (Dumay, 2016 ). Greenwashing aims to pursue this objective unethically by disseminating misleading disclosure.

Thus far, the absence of an effective mandatory ESG reporting framework left room for manipulating the information that was voluntarily disclosed (Zharfpeykan, 2021 ). Manipulating the information generates information asymmetries that mislead the actors in the social and competitive system and help to achieve the above-mentioned goals, without the company acting as a “good citizen” (Mahoney et al., 2013 ). The potential benefits in terms of improvements in relational and reputational capital, in fund-raising, and in financial performance induce companies to show an environmental responsibility even if they are not environmentally committed (Siano et al., 2017 ).

Misleading disclosure enables legitimating corporate actions that are not good practice and do not truthfully reflect reality. Disclosure therefore assumes the two-fold role of seeking transparency to involve stakeholders in the company’s activities and of being a communication strategy aimed at establishing intangible resources, both useful in creating economic value.

6.1 The role of reputational and relational capital

Recent literature (e.g., Rabaya & Saleh, 2022 ) informs that reputational and relational capital are crucial economic drivers of a company’s value, especially in the current era where invisible assets become distinctive resources. In this sense, environmental disclosure is viewed as a useful instrument in building reputational and relational capital and, therefore, financial performance and competitive advantage (Cantele & Zardini, 2018 ). The link between disclosure, competitive advantage, and value becomes manifest in disclosure that has the ability to nourish invisible assets that, as mentioned, are often effective economic value drivers. Companies’ legitimation and stakeholders’ engagement facilitate the generation of reputational capital. Bitektine ( 2011 , p. 160), in proposing a theoretical correlation between legitimacy and reputation, emphasizes a distinction between the two concepts: “This theorized correlation, however, should not be regarded as a lack of discriminant validity between the measures of the two concepts but, rather, as the effect of an overlap in criteria that evaluators use to make two fundamentally different forms of judgment.” Dollinger et al. ( 1997 ) concur with this view, identifying community and green responsibility as key dimensions of reputation.

Environmental disclosure, by strengthening the relational capital, is instrumental in ensuring legitimation. Nowadays, reporting environmentally responsible behaviors is considered a crucial determinant of improving the relations with stakeholders, the corporate reputation, and gaining a competitive advantage (Uyar et al., 2020 ; Rabaya & Saleh, 2022 ).

As Rabaya and Saleh ( 2022 ) explain, environmental commitment entails an improvement of financial performance, a reduction in cost of equity, and an improved credit rating (La Rosa et al., 2018 ). Both the improvement of financial performance and the reduction in cost of equity are value drivers that contribute positively to improve economic value for shareholders, which is the basis of expected future income and risk (Rappaport, 1986 ; Stewart, 1991 ). However, the above effects on corporate value can become concrete if stakeholders are aware of the poor environmental commitment. In this sense, environmental disclosure contributes to creating the relational capital strictly linked to the company’s reputation (De Castro et al., 2004 ) and, therefore, to a sustainable competitive advantage. Certain scholars (Cantele & Zardini, 2018 ) consider reputation to be a first intermediate objective and they view competitive advantage as a second intermediate goal of companies that are willing to ultimately increase financial performance through enhancing environmental responsibility. In other words, the link between accomplishing sustainability and improving financial performance is mediated, first, by reputation, among other determinants, and second, by the achievement of cost or revenue advantages.

Fombrun ( 1996 , p. 11) defines reputational capital as “a form of intangible wealth that is closely related to what accountants call ‘goodwill’ and marketers term ‘brand equity.’” Reputation derives from stakeholders’ perception of a company that becomes clear in their reactions (Deephouse, 1999 ). Among the several drivers of reputation, social responsibility is considered not only one of those drivers, but in fact a prerequisite to reputation (Rettab et al., 2009 ; Cantele & Zardini, 2018 ). Since, as we previously reported, reputation assumes the strategic role of gaining a competitive advantage (De Castro et al., 2004 ), it represents one of the greatest opportunities for creating economic value. However, reputation is a fragile and scarce resource and it is highly dependent on the relation between the company and its external environment (Gatti et al., 2021 ): without credibility there is no reputational capital (Worden, 2003 ). This normative dimension of reputation, which relies on credibility, confirms its link with relational capital and recognizes the role of greenwashing as a value creation strategy. This viewpoint is consistent with the results of Cho et al. ( 2022 ) who highlight that reporting bad news also helps to generate the impression of company transparency and strengthens company credibility.

Even if environmental disclosure is considered an important tool for preventing reputational damage (Reber et al., 2022 ; Cooper et al., 2018 ), deceptively manipulating disclosure, a practice that characterizes the greenwashing strategies, can impact the reputational risk and generate reputational damage. Siano et al. ( 2017 ) proposed a concrete example of reputational damage arising from misleading reporting. This is illustrated in the so-called “Dieselgate” case (Gatzert, 2015 ), which suffered a significant reputational loss as a result of fraudulent behavior fostered by misleading corporate disclosure. Referring to this, Siano et al. ( 2017 ) clarify the key role of reputational capital in research that aims to investigate the greenwashing phenomenon. In fact, firm reputation can be seen as a “protection” against the possible market valuation of real environmental performance but, in a different perspective, reputational damage, depending on stakeholders’ awareness of the gap between the positive image that greenwashing generates and the real, less favorable, environmental commitment, may have a value destroying effect (Cooper et al., 2018 ).

Reputational capital is important, also to improve a company’s competitiveness in the financial markets, thereby boosting its capacity to gain access to financing resources, bearing lower costs than competing companies. As Mazzola et al. ( 2006 ) stated, a good reputation contributes to companies being considered an “investment choice.” In recent years, this possible impact of environmental responsibility on companies’ capacity to attract financing is demonstrated by the issuing of “green bonds” that, as the London Stock Exchange ( 2021 , p. 2) states, are “any type of bond instrument where the proceeds will be exclusively applied to finance or re-finance in part or in full new and/or existing eligible ‘green’ projects.” As Dye et al. ( 2021 ) argue, nowadays environmental issues are variables with the ability to influence financing decisions, which obliges financial institutions to disclose information about their environmental impact. However, when reporting is unclear, the emerging information asymmetries can prejudice the decision process of a potential investor (Rabaya & Saleh, 2022 ). and if investors become aware of a firm’s misleading disclosure, the market responds to such greenwashing by producing negative abnormal returns and negative impacts on corporate financial performances (Testa et al., 2018a ). Also, the market can detect whether a company is an “environmental wrongdoer” because environmental performance scores can reveal the gap between what is said and what has been done. Then, the market has the ability to punish such a trespassing firm (Du, 2015 ).

Further, a good reputation helps reduce market volatility and helps foster the management of potential corporate or environmental crises (Mazzola et al., 2006 ). For these reasons, reputational capital, among other things, should be considered an important value driver.

Reputational capital is related to various essential elements, such as relationships with stakeholders and communication, which influence people’s perceptions. Relational capital is a component of intellectual capital (Stewart, 1997 ). The concept of relational capital, theoretically supported by a resource-based view (Barney, 1991 ; Wernerfelt, 1984 ), stems from the value added by the relations between a company and the relevant environmental actors. Communication is a fundamental asset of relational capital, which – within the company – aims to manage and strengthen relationships with all stakeholders (Velte, 2022 ).

Value is a broad concept that goes beyond the boundaries of its financial dimension, involving a social perspective too (Dumay, 2016 ). In November 2020, the International Valuation Standard Council (IVSC, 2020 , p. 4) stated that “‘Social Value’ includes the social benefits that flow to asset users (social investment) and the wider financial and non-financial impacts including the wellbeing of individuals and communities, social capital and the environment, that flow to non-asset users.” From the IVSC’s viewpoint, value is a wide concept, which includes three dimensions: the monetary benefit to the asset owner, the social benefit to asset users, and the social benefit to non-asset users (IVSC, 2022 ). The first component could be more strictly linked to a financial concept of value, while the second and the third components are included in the concept of social value.

The social benefit to asset users is defined as “social investments,” while the social benefit to non-asset users are defined as “the benefits derived from the asset that flow to the non-asset users including the wellbeing of individuals and communities, social capital and the environment” (IVSC, 2020 , p. 4).

The conceptual framework proposed by the IVSC can include the companies’ environmental responsibility. Further, green strategies can foster not only an increase in shareholders’ value but also an improvement of the social value. Green strategies, in fact, could also generate benefits for asset users, e.g., health benefits deriving from the use of natural products, or for non-asset users, e.g., in terms of reducing pollution or creating green urban spaces. In addition, the IVSC deepens the possibility of generating social value, introducing the concept of “social asset,” i.e., an asset held “with the primary objective of providing social benefits to asset users and non-asset users” (p. 9), which can generate value not solely for the owners but also for other stakeholders.

Following the above conceptualization, companies’ greenization or environmental efforts, in general, should be considered as positive value drivers for improving both the economic value for shareholders and the social value for stakeholders. In fact, both shareholder value and social value can be improved through green strategies. However, if the value creation process is not based on a redefinition of the business model but only on a misleading communication strategy, different considerations arise. This view is consistent with Cho et al.’s ( 2022 ) evidence showing that a self-referential sustainability disclosure could be effective as a reputation protection tool.

In Fig. 3 we propose a conceptual framework representing the background we suggest for future empirical testing of the research questions that stem from the analysis of greenwashing in a business economic perspective.

Greenwashing conceptual framework. Source: Author’s own elaboration

Greenwashing aims to increase shareholders’ value by improving reputational capital without really acting responsibly. The lack of real actions underlying disclosed information, as well as the inclination to conceal illegal or unsustainable behaviors (Marquis et al., 2016 ; Seele & Schultz, 2022 ) that can generate the onset of environmental problems, cannot be considered a positive value driver in the broader social-capital-related perspective, although it can potentially increase the economic value. If external stakeholders are not aware of the misleading intent of the company’s disclosure, the company’s credibility is not damaged. Even so, the social capital which can be decreased or threatened, cannot be improved by implementing greenwashing strategies. In this situation, managers should not adopt a short-sighted strategy without evaluating the possible long-term negative impacts of processes that destroy social value, relating also to the shareholders’ financial and strategic value.

Since credibility and loyalty represent crucial invisible assets that, in turn, are a fundamental prerequisite to achieving reputational results (Worden, 2003 ), the value creation process cannot be virtuous if stakeholders become aware that the disclosure of the environmental practices lacks clarity. Other research corroborates this consideration (Zharfpeykan, 2021 ; Karaman et al., 2020 ), finding that reputational capital can generate a competitive advantage if companies provide honest disclosure regarding challenging issues. Consequently, investigating the circumstances in which greenwashing produces a value-destroying process or constrains the value creation process. could be important. If a firm is accused of being a greenwasher , investors and other stakeholders reinforce the opinion that the company is not environmentally compliant or that it is dishonest, thus formulating a negative valuation (Du, 2015 ). Further, the strategy of disclosing only matters related to symbolic involvement in environmental responsibility will be not effective in achieving long term financial and social benefits, because symbolic actions cannot improve critical environmental situations, such as pollution, waste reduction, and so on (Walker & Wan, 2012 ). In the field of business ethics, research shows that if firms “don’t walk the talk” (Berrone et al., 2017 ) they are subjected to reputational damage and their intent to legitimize themselves is penalized. Further, it has to be noted that the extent of these negative consequences, observed in terms of reputation and value, also depends on some characteristics of the institutional setting in which companies operate. The regulations that impact the quality of the disclosure, the strength of legal enforcement, and the presence of vigilant organizations constitute such value determining features (Velte, 2022 ; Berrone et al., 2017 ; Delmas & Burbano, 2011 ).

The growing importance of environmental issues directs researchers to deepen the investigation of companies’ sustainable behavior, especially if they are clearly not ethical. Within the proposed theoretical framework, disclosure is considered a key driver in generating stakeholder awareness about companies’ environmental commitment. This helps to improve the stakeholders’ engagement in the strategies that companies choose to signal and legitimate their behavior.

The scarcity of mandatory disclosure, creates space for a more effective role of voluntary disclosure regarding greenwashing (Guix et al., 2022 ). Although the institutional context where research is developed has more and less disclosure regulation, there are opportunities for research development on the possibility that seeking legitimation and greater stakeholder engagement could be grounded in information asymmetries rather than in real environmental strategies.

The links between environmental commitment, relational and reputational capital, and economic and social values are conditioned by an underlying business model devoted to the environmental strategies that underpin a company’s “ green talk. ” In fact, if substantive actions do not support disclosure, companies’ credibility can be threatened (Gatti et al., 2021 ). All this is important, also to understand the possible consequences of greenwashing, both for companies and for stakeholders. Greenwashing, as the literature analysis demonstrates, is a multifaceted phenomenon (Pizzetti et al., 2021 ). Consequently, greenwashing strategies should be considered in their various manifestations and nuances, as this will identify several intermediate positions that lie between the two extreme situations captured as “true or false environmental responsibility,” as Fig. 3 shows. Greenwashing can be a successful strategy only if the company’s credibility is not questioned. Otherwise, greenwashing can produce a negative effect on companies’ relational and reputational capital generation and, in turn, on their value creation (Cho et al., 2022 ; Gatti et al., 2021 ; Du, 2015 ).

Considering social value in its dimension of social benefits for asset users and for non-asset users or, instead, considering the economic value for shareholders, we can come up with distinct pointers for developing hypotheses. While social value can derive from a real environmental commitment, researchers should investigate whether economic value can also be improved by implementing greenwashing strategies that are not supported by substantive or lawful actions, but that are grounded in misleading disclosure.

We assume that greenwashing could produce a twofold effect. If the stakeholders do not perceive the greenwashers’ misleading intent, scholars might hypothesize that greenwashing can produce a positive effect on the firms’ reputation and on its relational capital, as well as on the economic value for the shareholders. Otherwise, greenwashing can produce negative effects both on the economic value for the shareholders and on the social dimensions of value.

7 Discussion

Our study aimed to investigate the issue of greenwashing from a theoretical point of view, identifying greenwashing is a multifaceted concept that engages scholars in several disciplines (Pizzetti et al. 2021 ). In fact, greenwashing can generate impact relevant to several themes and fields of study, such as the role of corporate disclosure, possible impacts on financial performance (Testa et al., 2018a ), strategy and marketing, sociology, psychology, and law (considering, e.g., legality, rulings, corruption, and so on). This paper is interested in the main business economic theories in which delineating the role of disclosure as a key tool in greenwashing strategies, is in focus. Also, we have highlighted the potential link between greenwashing and a broad concept of value that includes its social dimension.

In this wide context, we first introduced issues on corporate governance and the institutional context that should be taken in account to best define the greenwashing concept. The extent of reporting-based strategies, such as greenwashing, should be considered in the light of corporate governance features, such as the remunerations related to sustainability, as ESA ( 2022 , p. 5) has articulated in stating that “(g)reenwashing is a complex phenomenon which can involve or impact a multitude of financial market participants and potentially affects all sectors in the sustainable value chain.” Further, the institutional context in which companies operate, that is a crucial determinant of greenwashing (Delmas & Burbano, 2011 ; Marquis et al., 2016 ), needs attention. Analysis of both corporate governance and social environmental issues should be given scholarly attention by those fervent about sustainability reporting.

Both scholars (e.g., Dye et al., 2021 ; Kinderman, 2019 ; Jamali & Karam, 2018 ) and practitioners recognize an urgent need for a mandatory environmental disclosure improvement. On the one hand, regulations could indirectly involve companies in a self-regulation process regarding environmental behavior (Webster, 2020 ). On the other hand, a regulated level of reporting quality, harmonization, and transparency has been presented as the “end of the ‘self-regulation’ era” (Khan et al., 2021). Further, considering the increasing importance of environmental issues in investment decisions, wider regulation could be seen as a fundamental mechanism to protect investors, since sustainability disclosure is a tool for communicating the company’s commitment to green issues to potential stockholders or lenders (Dye et al., 2021 ).

Additionally, after conducting our literature review, we found a number of research directions that need attention, which helped us develop an inclusive perspective on the different interpretations of the greenwashing concept.

In fact, at this stage, we aim for our research to contribute to satisfying the need for a clear conceptualization of greenwashing. Therefore, we propose a comprehensive structuring of greenwashing-related features and of what motivates greenwashing. We have clarified the role of the main theories that could be used or adapted to explain greenwashing behaviors and motivations and to support research devoted to greenwashing (Delmas & Burbano, 2011 ).

By extensively conceptualizing greenwashing we offer scholars a theoretical framework, and we have clarified the issue they investigate. By doing this we provide a background for operationalizing greenwashing through the design of indicators that can be used by researchers in developing empirical studies or by authorities and regulators in monitoring the phenomenon. We propose a conceptualization that organizes the several definitions of greenwashing into some “orienting pillars.” Our literature analysis considers the numerous greenwashing definitions in order to recognize certain recurring features.

Greenwashing can be seen as a deliberate strategy (Seele & Shultz, 2022 ) realized through the use of different kinds of corporate disclosure (selective, misleading, false, and so on) or through actions that aim to either enhance symbolic disclosure or divert attention (Gatti et al., 2021 ). In this sense, greenwashing depends on a company-related factor, identified by the level of misleading information that the firm provides, and on a relational factor, represented by the accusation that results from stakeholders’ recognition of the misleading intention.

This background to greenwashing suggests relevant research questions for future studies that should investigate the risk attached to the inconsistency of voluntary non-financial reporting, as well as the ways in which green communication involves unethical or illegal behaviors (Siano et al., 2017 ).

Additionally, many authorities signal that greenwashing is a complex phenomenon and indicate that currently a unitary definition of its drivers and a description of its characterizing features are lacking (ESA, 2022 ). In such scant information, we recognize possible research contributions as well as the implications of our framework. First we propose an analytic perspective for researchers, and second a representative scheme of greenwashing which controlling authorities could usefully apply (ESA, 2022 ).

Our framework sheds light on the nature of the relations between the environmental efforts of companies, their impact on relational and reputational capital, and ultimately on a broad concept of value, which includes a social dimension. These relations depend on the support that companies’ green talk achieves by redefining their business model since this is required to foster a shared value creation process (Arena et al., 2022 ).

Also, since greenwashing can be effective for companies only if their credibility is not in question, the multifaceted nature of greenwashing suggests scholars should also focus on the several middle positions that lie between the two extreme conditions represented by dichotomy of true or false environmental commitment. Our framework demonstrates that while greenwashing is not a social value creation strategy, its role as a shareholders’ value driver could have different effects depending on whether stakeholders suspect the real intent of the company (De Vries et al., 2015 ; Gatti et al., 2021 ). Further, Gatti et al. ( 2021 ) state that the effects of greenwashing vary in relation to the greenwashing typology. Within the framework we designed, this means that the impacts of greenwashing on the relational and reputational capital and, in turn, on companies’ value, should be considered in the light of the accusation that follows the type of strategy a company has chosen. For example, a manipulation strategy could result in worse stakeholders’ reaction than just an attention diversion.

Taking this into consideration, scholars should investigate the possible impact an increase or a decrease of the social dimensions of value might, in turn, produce on the economic value creation. Another research implication involves the scholars interested in greenwashing issues and stems from the need to improve research on the development of methodological issues aimed at defining a way of measuring greenwashing.

8 Conclusions

This study is particularly contextualized in the current period, due to the increasing attention global and domestic institutions invest in improving mandatory environmental disclosure and also due to the increasing attention governments invest in companies’ environmental responsibility and ‘greenization’.

Our research has three main scientific contributions: First, we elaborate a conceptual scheme for orienting scholars regarding the multifaceted features of greenwashing. Second, we describe a theoretical background, which gives evidence of pertinent relations between the main theories that support greenwashing studies, aiming to define a conceptual organization capable of explaining firms’ motivations and behaviors and of supporting greenwashing research. Third, we propose our conceptual framework while also highlighting the potential emerging research issues. Since greenwashing is a strategy, the framework that we built might be valuable as a tool to foster managers’ strategic decision making processes. This would allow them to define their strategies from a value creation perspective and to evaluate the possible effect of such strategies.

We also identify relevant practical implications and contributions of this study, especially referring to the actors of the social environment and to their policies. Our first practical contribution is related to authorities’ declared need of a clear definition and framework for investigating greenwashing as a phenomenon, its features, and the related risks (ESA, 2022 ) in the current context. The contemporary setting is characterized by a rapid evolution of regulatory regimes and by the increasing importance attached to environmental issues. Particularly, authorities’ need for a clear definition is due to supervisors being called to investigate, prevent, and constrain greenwashing. Considering our study’s objectives, it contributes to fulfill this need of authorities. Further, the role of the so-called social watchdogs, such as Consob, other authorities, or NGOs in constraining misleading strategies such as greenwashing emerges (Berrone et al., 2017 ; Li et al., 2023 ). In fact, a conceptualization of greenwashing, which represents the first step of our research, has also been requested by practitioners and not only by researchers.

We further contribute by highlighting relevant needs to actors in the institutional setting, such as government, local authorities, or supervisors. Such needs include those of rapidly enforcing stronger regulations and effective legal enforcement, of improving mandatory environmental disclosure, as well as introducing a process of auditing the reporting process (De Simone et al., 2021 ). As Du ( 2015 ) states, self-regulation is not effective in reducing the gap between substantive and symbolic behaviors, considering also the relevant impact the environmental disclosure may have on financial markets’ products such as green bonds. In fact, our analysis demonstrates that voluntary unaudited disclosure is the main tool for companies to engage in greenwashing. Since greenwashing is a strategy, the study addresses the characteristics of such a strategy and, therefore, highlights some crucial features that could serve authorities in better defining and implementing their policies.

Finally, the importance of analyzing the ESG impact on value is growing (IVSC), even if the related literature is still new, as the world of regulators emphasizes. Greenwashing is a strategy related to sustainability, therefore it is an aspect to be included in the development of the ESG reflection of business valuation.

Our analysis also offers a suggestion for future research. Considering the crucial role of disclosure in the theoretical framework we defined, future research could investigate the legitimacy theory perspective focusing on mandatory disclosure as well. Our conceptual framework sheds light on the importance of studies devoted to analyzing the impact social value destruction, due to wrong greenwashing strategies, might have on economic value. Further, it could be interesting to overcome any of the limitations our paper has, by empirically testing the theories to which we have drawn attention, which motivates greenwashing strategies and their potential impacts on companies’ value.

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Bernini, F., La Rosa, F. Research in the greenwashing field: concepts, theories, and potential impacts on economic and social value. J Manag Gov 28 , 405–444 (2024). https://doi.org/10.1007/s10997-023-09686-5

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'Climinator' vs. greenwashers: Researcher develops AI tool to debate climate on a factual basis

by Andres Eberhard, University of Zurich

Companies like to act "green" by publishing thick environmental sustainability reports replete with photography of pristine landscapes, but precious few of them keep their promises. Finance professor Markus Leippold is using AI-based tools to fight greenwashing.

Wherever the Terminator goes in the eponymous movie, the cyborg from the future wreaks havoc. "I'll be back," he says at a police station before barreling a car into the precinct and killing the police on duty there. The mission of the Terminator, embodied by actor Arnold Schwarzenegger, is nothing less than the destruction of humanity.

The "Climinator" gets down to work with much more benevolent intentions. It is an AI tool whose mission is to put the climate debate on a more factual basis, which is a necessity in the battle against global warming . The Climinator was developed by a group of UZH researchers led by Markus Leippold, a professor of financial engineering. Its artificial intelligence enables counterfactual statements on climate-related issues to be exposed and debunked within minutes.

The Climinator deals with false and fake climate facts just as destructively as the Terminator treats its adversaries. It stamps a verdict of "incorrect" on Swiss People's Party President Marcel Dettling's statement that no one can halt climate change, and it calls his assertion that a reduction of greenhouse gas emissions will hardly arrest warming "misleading."

However, the Climinator doesn't stay as sparing with words as the original played by Arnold Schwarzenegger does. The AI-based tool appends to its verdict a multi-page argument complete with a list of sources, which it takes just under two minutes to compose. The sources it draws on are research papers that reflect the scientific consensus , particularly reports published by the Intergovernmental Panel on Climate Change (IPCC).

"It works kind of like the way things did with the ancient Greek philosophers," Leippold explains during a meeting in his office in Zurich. The fact-checking tool, he says, verifies the accuracy of statements by enlisting an array of large language models to interact with each other in a kind of debate. To prevent blind spots, the researchers even deliberately incorporated the perspective of climate denialists.

"It's like a Socratic debate where, in the end, scientific arguments determine the verdict," Leippold says.

Vague intentions instead of firm commitments

Leippold stood on the world stage for 15 minutes when he recently delivered a TED talk in Paris. The nonprofit organization TED provides a platform for experts whose ideas it deems are worthy of consideration and posts recordings of TED talks on the internet.

The YouTube video of Leippold's TED appearance has racked up around a half-million views to date. Leippold leveraged the attention to hammer home his main message. "Global warming, at its root, is an economic problem," he said. Emissions ultimately are caused by human economic activity, and that activity is coordinated by financial markets, he explains.

Leippold's point is that in order to halt global warming, businesses need to invest in sustainable technologies. And in order to steer investment in desired directions through laws or incentives, for example, policymakers need transparency. But that's in short supply at present.

Although every self-respecting large company publishes a sustainability report these days, hardly anyone really reads them carefully. So, there is a huge risk of greenwashing. Take Shell, for example. The oil company's latest sustainability report is 98 densely worded pages long. Photos adorning the pages show workers conferring in front of a solar panel array and managers being guided though lush fields by local natives.

Shell, though, is one of the world's largest emitters of CO 2 and has been reprimanded repeatedly for greenwashing. The problem is that companies use words that sound good, but they commit to as little as possible. That's why Leippold and his team have developed an additional AI-based tool capable of telling tangibly measurable climate pledges from vaguely worded intentions. Or as Leippold put it in his TED talk, "We separate the walkers from the talkers."

That works very well by now. However, the finding revealed by the research conducted thus far with the software is dismaying: roughly every second company has a Cheap Talk Index score above 50%. In other words, every second promise in sustainability reports is worthless.

One example of nice-sounding but essentially vague wording is the intention to become "climate-neutral by 2050." This frequently uttered vow can mean anything. It can mean, for instance, that the company pledging it will cease emitting greenhouse gases altogether. But it can also mean that said company will actually even produce more carbon dioxide , an action made possible through the trading of carbon credits that promise to make a contribution to combating climate change by, for example, funding the protection of ancient woodlands in Africa or Latin America.

Although there is a great deal of dispute about the effectiveness of carbon credits trading, companies deduct the saved emissions from their CO 2 output and become "climate-neutral" that way. Leippold likens this to the "old days of the Catholic Church, when one could buy absolution from sins by purchasing an indulgence."

But deception takes place more than just linguistically. Actual CO 2 and methane emissions are also susceptible to manipulation because the companies themselves are the only ones able to supply reliable data on them.

Leippold thus has his mind set on finding out the true magnitude of those emissions and how big an impact companies have on biodiversity in their vicinity. Satellites that deliver data in real time could make that possible. Smart image analysis software could then analyze the data. The researchers led by Leippold are currently working on developing a solution of that kind.

Chat about the climate with AI

In order to bring the trickery to light, the researchers' findings need to make their way out of the ivory tower. To ensure that happens, Leippold promises that all of the tools developed will be released to the public as open-source software. Some policymakers and international institutions already use these tools today to detect corporate greenwashing.

Another tool developed by the researchers can already be used by anyone today: on ChatClimate, users can input questions on global warming and receive answers to them powered by artificial intelligence. The large language model behind ChatClimate sources its information from the scientific findings in IPCC reports.

Leippold sees a lot of potential in this kind of platform. It's getting harder and harder, he says, to sift trustworthy information from the vast wilderness of data on the internet. "When Google was brought into existence 25 years ago, 25 million webpages were indexed. Today the Google Search index contains hundreds of billions of webpages."

Although googling is convenient, the results aren't always entirely reliable. A search engine, for example, trained on scientific evidence would be better suited to answer the question of whether a person should buy an electric car.

Combating greenwashing is also a personal matter for Leippold. During his TED talk, he mentioned that the birth of his children was what prompted him to engage in the fight against global warming in his capacity as a finance mathematician.

Asked about that during our conversation in his office, he clasps his hands together and reflects for a while before answering. Then he says, "I'm picturing the moment when I ask my grandchildren what they would like to do in the future when they grow up. What if they retort: 'What future?'"

The chances are good that Leippold's descendants will have nothing to reproach him for someday. After all, he is leaving nothing untried. Recently he even sent an e-mail to "Terminator" Arnold Schwarzenegger.

Leippold is hoping for a cooperation arrangement with the original, which of course would give a boost to public awareness of the Climinator fact-checking tool. A team-up isn't entirely unrealistic considering that the former governor of California hosts annual climate conferences in his native country of Austria. Leippold hasn't received a reply from Schwarzenegger yet, but will persevere with his efforts anyway, whatever the outcome.

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Greenwashing Exposed: A Close Look at the Existing Case Law (Part 2)

Ekaterina Aristova Leverhulme Early Career Fellow, Bonavero Institute of Human Rights, University of Oxford

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Greenwashing litigation is happening in different forums. In some jurisdictions, for instance, in Germany, as seen above, greenwashing cases are primarily filed with the domestic courts. At the same time, in other countries, greenwashing is subject to increasing regulatory activity of the local authorities. In Australia, both the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) have been particularly active in detecting and enforcing greenwashing conduct. In March 2023, the ACCC announced that it would be investigating several companies for potential greenwashing following an internet sweep which commenced in October 2022. The initial survey of 247 businesses revealed that 57% had promoted concerning claims about environmental credentials.

In the UK, the Competition and Markets Authority (CMA) and the ASA tightened up their position about problematic ad claims in recent years. In January 2022, the CMA commenced a review of environmental claims in the fashion retail sector. Later, in July, it announced an investigation into three brands—ASOS, Boohoo and ASDA—to scrutinise their green claims. In January 2023, the CMA further announced a review of environmental claims made by brands in relation to fast-moving consumer goods (food, toiletries, cleaning products, and personal care items). The ASA is also actively enforcing the advertising rules concerning environmental claims.

Aside from actions in the domestic judicial and non-judicial bodies, complaints have also been filed with the National Contact Points (NCP) established under the OECD for Multinational Enterprises on Responsible Business Conduct (Guidelines). ClientEarth filed a complaint against BP with the UK NCP that BP’s global corporate advertising misled the public in the way that it presented BP’s low-carbon energy activities, including their scale relative to the company’s fossil fuel extraction business. The ad campaign in question was eventually withdrawn, and the UK NCP rejected the complaint. Another complaint filed at the UK NCP against power generator Drax Group plc alleges that the company is misleading consumers by portraying itself as generating carbon-neutral electricity while actively damaging the climate and forests. In 2022, the complaint was accepted for further consideration.

In June 2023, the Guidelines were updated, and climate change is now explicitly addressed in the text. Paragraph 97 in the chapter about consumer interests asserts that ‘environmental or social claims that enterprises make should be based on adequate evidence and, as applicable, proper tests and verification’. Following the Guidelines’ update, the number of climate-related complaints referred to NCPs is likely to increase, and we might see new types of allegations within the scope of the expanded Guidelines, including about greenwashing tactics.

Who are the claimants?

A vast majority of greenwashing claims are brought by civil society organisations, which is hardly surprising because environmental activists generally initiate or support much climate-related litigation in the Global North and Global South. Other actors are, nevertheless, present. In Australia, a legal complaint against Glencore was launched with the ACCA and ASIC on behalf of The Plains Clan of the Wonnarua People and Lock the Gate Alliance. The allegations concern the company’s misleading claims about climate impact and its behaviour towards Traditional Owners. Another interesting case in Australia was commenced by the charity representing Australian parents , who sued EnergyAustralia for falsely claiming its products primarily generated by burning fossil fuels are carbon neutral. Notably, greenwashing claims are also pursued by the competitor companies (see, for instance, examples from Italy , Germany and the UK ).

Who are the defendants?

Greenwashing cases target companies in an increasingly diverse range of sectors. Historically, the so-called Carbon Majors—major carbon emitters in the energy, utilities, and mining sectors—faced the biggest hit from climate change litigation. By contrast, allegations of greenwashing span various industries, including agriculture, transport, fast fashion, finances and investment, cosmetics, plastic, renewable energy, and automotive industries. In June 2023, the Swiss advertising regulator ruled that FIFA misled consumers by claiming the Qatar World Cup in 2022 was the first ‘fully carbon neutral’ such event. Five similar complaints have been filed by a coalition of civil society organisations in Belgium, France, the Netherlands and the United Kingdom, and Switzerland later announced it would examine all of them. Claimants alleged that the carbon neutrality claims made by FIFA were based on a considerable underestimation of the GHG emissions generated by the organisation of the World Cup, and the carbon footprint of the event was ‘greened’ by using ‘carbon offsetting’ mechanisms that are not in line with international standards.

Two trends are apparent. The first one is a growing number of complaints targeting the aviation industry (see, for instance, judicial proceedings in the Netherlands against KLM over its ‘Fly Responsibly’ campaign; investigation by ASA in the UK of Ryanair’s claims to be Europe’s ‘lowest emissions airline’; and a complaint to the Competition Bureau of Canada challenging the Pathways Alliance’s ‘Let’s clear the air’ advertising campaign). One of the most recent examples is an ASA ruling against Etihad Airways , concluding that the company’s absolute green claim about ‘sustainable aviation’ was not adequately substantiated.

Another trend is the emergence of greenwashing complaints against a wide range of financial services providers, including banks, investment funds and insurance companies. Earlier this year, the European Banking Authority flagged greenwashing risks for banks . In October 2023, RepRisk, the world’s largest ESG data science company, published the results of the study, finding that the banking and financial services sectors saw a 70% increase in the number of climate-related greenwashing incidents in the last twelve months. Some examples are proceedings commenced by the ASIC against corporate pension fund Mercer Superannuation and investment management firm Vanguard Investments Australia Ltd ; a claim in Germany against an investment fund, Commerz Real Fund Management S.à.r.l. ; and complaints filed against HSBC in Australia and the UK .

This is the second blog post in a three-part series about greenwashing litigation (see Part 1 here and Part 3 here ).

Dr Ekaterina Aristova is the Leverhulme Early Career Fellow at the Bonavero Institute of Human Rights, University of Oxford.

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EU prepares to ban greenwashing

Companies will no longer be able to make misleading green claims under a draft EU law to be proposed in March, but there are concerns the metrics are weighted too heavily toward CO2 emissions.

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EU Prepares to Ban Greenwashing on Financial Reporting

“Carbon neutral” is a claim we are used to seeing on products these days, whether it be everyday goods or airline tickets with carbon offsets, but the European Consumers Organisation (BEUC) says this is almost always a lie. It has been working with the European Commission on a new greenwashing law that would rein in these kinds of claims. It wants to end the free-for-all of companies claiming products are “green”, “eco” or “environmentally friendly” with no factual basis.

“Carbon neutral is never true,” Dimitri Vergne, BEUC’s sustainability team leader tells Energy Monitor . “We feel even if you use a reliable and trustworthy mechanism [to prove carbon neutrality], which is often not the case, you can never guarantee to someone the product you are buying will be carbon neutral.”

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The Commission is putting the finishing touches on an EU ‘anti-greenwashing law’ that has been a long time coming. It was first previewed at the end of 2019 in the EU Green Deal put out by Commission President Ursula von der Leyen shortly after she took office. The goal was to make companies “substantiate green claims against a standard methodology to assess their impact on the environment”. However, since then the proposal has been repeatedly delayed because of controversy over what standard methodology should be used.

The plan now is to use an EU methodology called Product Environmental Footprint (PEF) , which has been in use since 2010 but continually revised over time. This uses a life cycle analysis to measure the environmental performance of a product throughout the value chain, from the extraction of raw materials to end-of-life, across 16 environmental impact categories. It can also measure the footprint of an organisation that claims to be green or to be reducing its emissions. PEF was designed to replace the myriad methodologies on the market that are confusing at best and misleading at worst.

The PEF approach has been welcomed by BEUC and also ECOS, an environmental NGO focused on standards, which has long complained of a ‘Wild West’ of green claims. There are more than 200 environmental labels in use in the EU and a 2021 study by the Commission found that 40% of these green claims are exaggerated, false or deceptive.

EU greenwashing law: too much about CO2?

However, not everyone is a fan of PEF. Life cycle analysis is a complicated and developing science, and there are concerns it is still heavily weighted towards the thing that is easiest to measure: direct [CO2] emissions. This, some argue, could ignore other environmentally important factors such as recyclability and toxicity. For instance, textiles could score well for being mass-produced in a way that lowers production emissions but could be using toxic chemicals that harm the earth. FEVE, the European federation of glass packaging makers, has argued that recyclable and reusable products like glass are unfairly penalised by PEF because they are energy-intensive to make but can be infinitely recycled. That infinite reuse is not considered by PEF’s metrics on recyclability, which just looks at whether the product can be recycled or not.

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Vergne says BEUC is sympathetic to these concerns, and it has been working with the Commission to find a balanced way to measure claims. “We like PEF, but we know it has some limitations. With something like textiles, it fails to capture hazardous substances or the release of microplastics. We have been discussing this with the Commission a lot and... [it] has said this PEF method would be the basis, but where it fails to capture the environmental impact of a certain sector it would need to be complemented.”

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According to a leaked draft circulated in January 2023, the law would try to get around this particular issue by banning any green claim on a product containing hazardous substances, even if it has very low CO2 emissions. The draft also says that the Commission will refine specific PEF methodologies for textiles and packaging, among other product categories. Once these sector-specific PEF methodologies and corresponding labelling schemes are approved by expert groups made up of national representatives, they will become legally binding across the EU through delegated acts that follow adoption of the primary greenwashing law. According to the draft, businesses will be given some flexibility in choosing which PEF methodology they wish to use.

It will be up to national governments to monitor and assess green claims, and to issue penalties to companies violating the law. Each government will have to set up a “system of verification for the substantiation of environmental claims” and inspections will have to be carried out by “independent verifiers”. The level of penalties for non-compliance can be determined by each government, but they should be “effective, proportionate and dissuasive”, and take into account the gravity of the infraction and “the economic benefits derived” from the misleading claim, according to the draft.

Two legal tracks

The draft proposal could still change significantly between now and when it is expected to be published, in March, and it will change further as it works its way through the legislative process in the European Parliament and Council . Consumer advocates will be watching the process to make sure the ambitious plans in the draft are not watered down by national governments that do not want the burden of enforcing it.

At the same time, these advocates are watching a parallel piece of legislation already working its way through the Parliament and Council – a green-minded revision of the EU’s unfair commercial practices law.

Vergne says it is this legislation BEUC hopes can be used to crack down on carbon offsetting schemes, as widely used by airlines. “One of the biggest problems we see is the claims which are based on [carbon] offsets,” he says. “This revision of consumer law is to make it more fit to take on the rise in greenwashing. It is an uphill battle, but we are trying to [convince lawmakers] to ban claims such as ‘climate positive’ or ‘carbon neutral’. The European Parliament is discussing this at the moment.” BEUC's goal is to have the final text forbid a company from giving a consumer the impression that a carbon offset, for a flight or a product, makes that purchase climate neutral.

However, airlines have insisted that offsetting programmes really can make a flight carbon neutral. Austrian Airlines , for instance, says the two ways it offers to offset flight emissions, which it calculates during the booking process, "make your flight carbon-neutral". Customers can either pay a donation to "climate protection projects" like solar photovoltaic installations or they can pay to fund the use of sustainable aviation fuel (SAF) . "With the use of SAF you can fly completely carbon-neutral with us using the quantity of SAF required to achieve full carbon reduction," the company promises. For the moment, these kinds of claims are not independently verified. If the EU greenwashing law passes, the claims would have to pass muster with the EU PEF.

BEUC is also lobbying for stricter controls on claims related to future environmental performance. “These are things like an airline promising you they will be carbon neutral in 2050, or a water company saying they will reduce their carbon footprint by 90% by 2035. We are saying if you engage in these kinds of claims you need to set up and disclose a full implementation process to show you are really serious about this, with milestones – not just relying only on carbon offsets,” Vergne says.

The hope is that the new EU anti-greenwashing law and revised commercial practices law will work hand-in-hand to curb the explosion of greenwashing claims currently seen on the market. Vergne says both are needed to achieve this; the former to set the overall aim and the latter to lay out many of the practicalities and bring the concept into line with general EU consumer law.

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Unlocking the Scope 3 opportunity in Asia Pacific

A view of asia pacific companies' progress on net zero targets, scope 3 emissions reporting, and their strategic, voluntary, and compliance efforts..

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The climate crisis is intensifying, but so too is the movement to decarbonize. The past two decades have seen a concerted push by governments, investors and consumers to hold companies accountable for their carbon footprint with corresponding efforts in the business community to track and report their Scope 1 and Scope 2 emissions.

More recently, there has been increased scrutiny on Scope 3 emissions, the indirect emissions that are produced by a company’s supply chain.

Measuring and reporting on Scope 3 emissions is critical to any climate or decarbonization goal as they typically make up 70–90 percent of a company’s total carbon footprint. Yet, they can be extremely challenging to accurately measure and report as they lie beyond the company’s formal span of control.

In this report, we examine the current equilibrium between strategic and voluntary initiatives at companies in Asia Pacific and compliance efforts in disclosing such emissions. The report assesses the progress and challenges faced by businesses as they strive to meet net zero targets in the coming years. It provides an analytical overview of the Scope 3 emissions reporting landscape in the region, delivering insights into one of the defining corporate themes of our time, and a look at how companies in Asia Pacific are responding.

The report is based on research led and compiled by Professor Neale O’Connor, La Trobe University Business School and the Pacific Basin Economic Council. This includes analysis of the published ESG reports of 338 companies listed on six major stock exchanges in Asia Pacific. The organizations can be categorized into eight broad areas of business: construction and industrial; utilities and energy; minerals and mining; automotive; healthcare and biochemical sciences; retail and F&B; electronics; others (including information & media services, transportation and logistics, and conglomerates).

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The majority of Scope 3 emissions are international in origin, so Asia Pacific companies play a significant role in providing accurate global supply chain emissions data due to their widespread geographic presence. The Scope 3 emissions of large US companies are often linked to manufacturing operations in regions like China, India, North and Southeast Asia. This indicates that more resources and expertise will be required in this area. An emphasis on corporate governance, executive incentives, and partnerships with NGOs while sharing responsibility for reporting will likely increase in the coming decades.

Michael Walsh CEO & Executive Director, Pacific Basin

The transition from spend-based to supplier- and product-based carbon measurement strategies underscores the importance of robust supplier relationships. Such partnerships are essential for fostering transparent information sharing, ensuring accurate reporting, and facilitating collective action to reduce environmental impact. Ultimately, improved emissions measurement drives strategic value and supports the shift from greenwashing to genuine sustainability efforts.

Neale G O’Connor Associate Professor, Forensic & Sustainable Accounting La Trobe Business School, La Trobe University

Reporting on Scope 3 emissions presents an opportunity for companies in Asia Pacific to drive sustainable business practices throughout their supply chains. By accounting for direct and indirect emissions, companies can identify areas for improvement, promote transparency, and foster collaboration with suppliers and customers. It is a crucial step towards achieving regional sustainability goals.

Dong-Seok Derek Lee Head of ESG in Asia Pacific, KPMG in South Korea

Scope 3 reporting requires Asia Pacific companies to transform their internal operating models, so they can accurately capture and report on their supply chain emissions. They will also need to create new supply chain strategies and adjust their external business models to reduce their emissions and progress towards a Net Zero target.

Peter Liddell Global Operations Center of Excellence Lead & Global Sustainable Supply Chain Lead

Uncovering the Scope 3 opportunity in Asia Pacific

Examining the current equilibrium between strategic and voluntary initiatives at companies in Asia Pacific and compliance efforts in disclosing Scope 3 emissions.

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Competition Bureau launches public consultation and publishes digest on greenwashing provisions

On June 20, 2024, the Government of Canada passed Bill C-59, amending certain provisions of the Competition Act (the “ Act ”). New provisions were added to target greenwashing in an effort to protect consumers from misleading advertisements related to a product’s or business’ environmental benefits. We recently posted an article in our series on amendments to the Act , titled: Amendments to the Competition Act – Bill C-59 and its impact on “Greenwashing” .

On July 22, 2024, the Competition Bureau (the “ Bureau ”) released a public consultation regarding the Act’s new Greenwashing provisions. The Bureau also published Volume 7 of its Deceptive Marketing Practices Digest (the “ Digest ”), which outlines its interpretation of certain greenwashing provisions. The stated goal of the public consultation is to provide enforcement guidance in consultation with Canadians to ensure transparency and predictability. The Bureau is seeking a wide range of perspectives and will carefully consider the feedback to provide better guidance to businesses and Canadians. Interested parties are invited to submit comments by September 27, 2024 .

DIGEST AND GUIDELINES:

A. ENVIRONMENTAL CLAIMS DEFINED

Within the Digest, the Bureau defines an environmental claim as “any representation related to the environment that has been made for the purposes of promoting a product or business interest.” These claims may include promoting a positive environmental quality or attribute of a product, service, or business, or downplaying a negative one. They can encompass various aspects of a product’s environmental impact, such as the sourcing of its materials, production, packaging, and distribution. These claims also extend to services, processes, and business practices.

B. TYPES OF CLAIMS RECEIVED BY THE BUREAU

The Bureau receives a wide array of claims relating to greenwashing, which are summarized below:

I. COMPOSITION CLAIMS:

These involve claims made to the public regarding the composition of products or their packaging. For example, a business claiming that its packaging is made from 100% recycled paper or recycled bottles must be able to substantiate those claims.

II. PRODUCTION PROCESS OF PRODUCTS:

These involve claims made regarding the steps involved in producing a product, including claims about the resources, energy, or materials used in the process. Examples include claims that a product was made with renewable energy or is carbon neutral.

III. DISPOSAL OF PRODUCTS AFTER USE:

These claims relate to the green disposal of products, such as claims that a product is fully compostable or recyclable.

IV. COMPARISON CLAIMS:

These claims relate to comparative environmental claims. For example, comparing a product or service to its previous version or to those of a competitor.

V. VAGUE CLAIMS:

Vague claims are often made by businesses and can be misleading to consumers. These claims do not explicitly set out the environmental benefits of a product or service but instead allude to them. Common examples include claims that a product is eco-friendly without specifying its actual environmental benefits.

VI. CLAIMS ABOUT THE FUTURE:

Among the more common complaints received by the Bureau are claims related to the environmental improvements that a business will accomplish in the future, such as achieving carbon neutrality by a specific date.

C. ASSESSING A CLAIM

When assessing a claim, the Bureau must consider both the “general impression” conveyed by the claim and its literal meaning. The general impression is determined by considering the entire advertisement, including the words, graphic elements, and overall layout of the representations. [1]

Provisions Seeking Feedback

With regards to section 74.01(1)(b.1) of the Act, which enforces claims about a product’s environmental benefits, the Bureau is particularly interested in hearing about:

What kinds of claims about environmental benefits are commonly made about products or services in the marketplace? Why are these claims more common than others?
Are there certain types of claims about environmental benefits of products or services that are less likely to be based on adequate and proper testing? Is there something about those types of claims that makes them harder to test?
What should the Bureau consider when it evaluates whether testing to support claims about the environmental benefits of products or services is “adequate and proper?”
What challenges may businesses and advertisers face when complying with this provision?
What other information should the Bureau be aware of when thinking about how and when to enforce this provision?

With regards to section 74.01(1)(b.2) of the Act, which enforces claims about a business or a business’ practices related to environmental benefits, the Bureau is particularly interested in hearing about:

What kinds of claims about environmental benefits are commonly made in the marketplace about businesses or business activities? Why are these claims more common than others?
Are there certain types of claims about the environmental benefits of businesses or business activities that are less likely to be based on “adequate and proper substantiation in accordance with internationally recognized methodology?” Is there something about those types of claims that makes them harder to substantiate?
What internationally recognized methodologies should the Bureau consider when evaluating whether claims about the environmental benefits of the business or business activities have been “adequately and properly substantiated?” Are there limitations to these methodologies that the Bureau should be aware of?
What other factors should the Bureau take into consideration when it evaluates whether claims about the environmental benefits of businesses or business activities are based on “adequate and proper substantiation in accordance with internationally recognized methodology?”
What challenges may businesses and advertisers face when complying with this new provision of the law?
What other information should the Bureau be aware of when thinking about how and when to enforce this new provision of the law? [2]

Tips for Businesses When Making Environmental Claims

The Digest also explains that the Bureau encourages environmental claims that provide truthful and accurate representations to consumers, as they enable consumers to make informed decisions. To better protect both businesses and consumers, the Bureau has provided the following tips for businesses to consider when making environmental claims:

1. BE TRUTHFUL, AND NOT FALSE OR MISLEADING:

Environmental claims must be true, both in their literal meaning and in the general impression they convey. The general impression is determined by examining the entirety of the representation, including the words or phrases being used, the manner in which the text is displayed, and any visual elements and their context. A claim can be literally true, but still create a false or misleading general impression about an environmental benefit.

2. ENSURE CLAIMS ARE PROPERLY AND ADEQUATELY TESTED:

Many environmental claims are performance claims regarding the efficacy, performance, or length of life of a product. For performance claims to be in compliance with the Act, the business must be able to demonstrate that the claim is based on adequate and proper testing . The testing required will depend on the claim and must be completed prior to the claim being public. The Bureau will provide further guidance regarding the new provision.

3. BE SPECIFIC ABOUT WHAT IS BEING COMPARED:

Many environmental claims state or imply some comparison. When a comparison is made, businesses should be specific about what is being compared and the extent of the difference between the comparisons. Otherwise, claims can become vague, exaggerated, or misleading.

4. AVOID EXAGGERATION:

Businesses should look at all claims very carefully, as it is common for environmental claims to exaggerate an environmental benefit.

5. AVOID VAGUE ENVIRONMENTAL CLAIMS IN FAVOUR OF CLEAR AND SPECIFIC ONES:

The more that an environmental claim is vague, the more likely it is that it will convey a general impression that the environmental benefit is broad. Claims about environmental benefits should be supported by adequate and proper testing, and representations about these benefits should hold true for a product throughout its entire life cycle. More broadly, if the environmental claim pertains to the business as a whole, the environmental impact of all business activities must be taken into consideration when making the claim. Be clear about whether the benefit applies to part of or the entire product, service, or business.

6. AVOID ASPIRATIONAL CLAIMS ABOUT THE FUTURE:

Businesses should be careful about forward-looking claims, goals, or aspirations to ensure they are factual rather than merely aspirational. Before making these claims, businesses should:

have a clear understanding of what needs to be done to achieve what is being claimed;
have a concrete, realistic, and verifiable plan to accomplish the objective with interim targets; and
ensure that meaningful steps are underway to accomplish the plan.

The Bureau highlights that even if a business has a clear plan to accomplish its environmental benefits, care must be taken to ensure that the claim is not misleading. [3]

Key Takeaways

Environmental claims by businesses regarding their products, service, or practices can run the risk of being considered greenwashing. To avoid such risks, businesses should always be clear, specific, and truthful in their environmental claims and assess them both in their literal meaning and general impression.

Businesses seeking clarification on the amendments to the Act related to greenwashing are encouraged to submit their questions and feedback to the Government of Canada.

Filed under

Competition & Antitrust
Miller Thomson LLP
Greenwashing

Organisations

Competition Bureau (Canada)
Government of Canada
Competition Act 1985 (Canada)

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