The impacts of firm-level and country-level variables on Environmental, social and corporate governance greenwashing

Abstract

Abstract
 While ESG investments have increased in the last 10 years, stakeholders are curious about the correctness of the ESG claims of companies. Greenwashing (GW) is a conscious and selective information disclosure of firms to create a positive image in the eyes of the stakeholders. It limits the integration of ESG data into investments as the stakeholders lose their trust in that declarations. Unaudited sustainability reports, lack of standardization in disclosure rules of ESG data, and the absence of a global governance body to ensure the accuracy of reported ESG information increase the risk of GW behaviors. 
 Purpose: The motivation of this study is to help out stakeholders to determine which company factors (size, profitability, board structure, governance model) and country factors (corruption, unemployment, wealth of the society) impact the ESG greenwashing behaviors within STOXX 600. 
 Method: We implemented a panel regression model. The dataset covers STOXX 600 firms from 2009-2020.
 Findings: The results show that each ESG GW dimension is impacted by a different company and country variables. An increase in CSR committee and embedding sustainable factors into the Executive remuneration are two main factors that decrease all three dimensions of GW behaviors. Company governance and financial factors have more impact on the GW compared to the country factors.
 Originality: According to our knowledge, this is the first research that evaluates each greenwashing dimension at the firm and country levels.