Greenwashing Practices and Firm Performance: Evidence for European MNEs

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2023-07-06

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en

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In order to contribute to the ongoing research on the role of firms and their impact on the environment, this paper assesses the effect of greenwashing on firm performance. By measuring the discrepancy between a firm’s symbolic action and its actual green performance, a proxy for greenwashing is formed. Different literature on drivers and mechanics surrounding greenwashing practices substantiate the reasoning behind the analysis. In addition, the risk of disclosure and pressures from stakeholders both influence firms’ green behavior. Thereafter, the empirical analysis considers data for over 2,500 European MNEs regarding ESG-, and firm-specific characteristics. In contrast to the hypotheses, results indicate that engaging in greenwashing lowers firm performance after a time period of one year or more. The opposite is occurring with firms operating in an emission-intensive industry. Here, engaging in greenwashing starts with lower performance, but turns positive over time. At last, this paper offers recommendations for further research on a more complete understanding and measurement of greenwashing.

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Faculteit der Managementwetenschappen