Abstract
Greenwashing is a significant problem in the dynamic world of sustainability and environmental governance of corporations. It has been described as both deliberate and inadvertent reporting falsely the corporate environmental performance, sustainability undertakings, ecological engagements with the perspective of set reputational, financial or competitive advantage. In recent years, with the concept of environmental, social, and governance (ESG) investing becoming more popular, and climate responsibility becoming the central issue of the global policy discourse, corporate environmental claims have become increasingly regulated and significant in the market. However, it has also caused exaggerated or misrepresented environmental disclosures and the worry of legal accountability, investor protection and market integrity.
The paper views greenwashing as an example of corporate misrepresentation of the environment and establishes whether the current legal and regulatory frameworks are applicable in combating greenwashing. The papers look at the evolution of the doctrine, implications on the market and enforcement problems and propose regulatory reforms to improve transparency and responsibility.
Keywords:
Greenwashing, EnvironmentalSocial and Governance (ESG), Sustainability Reporting; Environmental Disclosure Regulation, Corporate Environmental Governance, Investor Protection, Legal and Regulatory Frameworks.
- Introduction
Climate change and environmental degradation has led to the burgeoning of corporate sustainability and environmental reporting of their performance. The importance of ESG reporting frameworks and sustainability statements has now become highly significant to the investors, regulators as well as consumers in the assessment of corporate responsibility. However, as the real green innovation has risen in the same proportion, so has greenwashing whereby business organizations have claimed to be green or reported only good news and conceal bad news.
Greenwashing is an ethical but legal and economic problem. It distorts signals in the market, misleads investors, nullifies consumer agency and undermines sustainability paradigms. The threat of environmental misreporting assumes a regulatory aspect in India where such disclosures of ESG have been mandatory to the top listed companies to the Business Responsibility framework and Sustainability Reporting (BRSR). Deceptive green claims are also getting an increasing amount of attention by the securities regulators and competition agencies worldwide.
In spite of the negative trend of greenwashing that has been identified, the regulatory activities with respect to the same are described as both irregular and reactive. The research is, therefore, directed towards a critical discourse of the topic of greenwashing with reference to the reforms in laws concerning responsibility, market regulation and market integrity.[1]
[1]Magali A. Delmas & Vanessa Cuerel Burbano, The Drivers of Greenwashing, 54 Calif. Mgmt. Rev. 64 (2011).