The End of Greenwashing? A Renewed Infrastructure for CSR Information in the New Normal

Abstract

Despite the negative consequences of the COVID-19 pandemic, economic recession, and climate crisis, increased public demand for transparency and credible corporate social responsibility (CSR) information represents a positive outcome of these recent disruptions. Such outcomes urge a re-definition of the CSR information infrastructure in the new normal, to allow for the incorporation of a novel system perspective of resilience and sustainability coupled with a more diffused awareness of sustainability, converging stakeholder expectations on CSR, and a widespread access to CSR information thanks to technological and regulatory factors. Our dynamic model suggests a transition from an old normal of opacity, where it is difficult to detect and punish greenwashing, to a new normal of higher transparency, where it is easier to accurately evaluate the degree to which CSR is implemented. We predict organizational responses maintaining a distinction between CSR information quality (substantive vs symbolic) and its timing (transitory vs enduring) and argue that in the new CSR information infrastructure, firms’ incentives to implement and perpetuate opportunistic CSR information reporting, i.e., to greenwash, are constrained, as such behaviors impair their legitimacy and ability to survive. Our framework expands prior dynamic models on the implications of CSR information and transparency, and sheds light on the plausible positive outcomes of the COVID-19 crisis.