Why greenwashing occurs and what happens afterwards? A systematic literature review and future research agenda

Abstract

The greenwashing phenomenon, which implies the misalignment between environmental disclosure and performance, has received significant scholarly attention. We review the diverse literature on corporate greenwashing to develop an integrative framework that examines its antecedents and consequences from the perspective of corporate governance. Specifically, we identify theoretical perspectives commonly assumed in the literature on greenwashing, including green marketing, green finance, signaling strategy, and corporate decoupling. We outline why and how greenwashing occurs from the aspects of external governance environments and internal governance mechanisms, and what influences greenwashing exerts on firm performance and stakeholder reactions. The analysis further leads to the identification of a research agenda to continue advancing our understanding of corporate greenwashing. Future studies should re-evaluate whether environmental, social, and governance (ESG) issues should be included in greenwashing, address potential trade-offs within an ESG framework, explore internal governance mechanisms that influence greenwashing, and examine the differentiated impacts of corporate greenwashing on various stakeholders.

Keywords: Economic consequences; Environmental, social, and governance (ESG); External governance; Greenwashing; Internal governance; Systematic review.