Analyzing the Interconnection Between Environmental, Social, and Governance (ESG) Criteria and Corporate Corruption: Revealing the Significant Impact of Greenwashing

Abstract

Greenwashing undermines the trustworthiness and integrity of environmental, social, and governance (ESG) reporting. It undermines disclosure quality, confuses decision making, destabilizes financial markets, and reduces the probability that people will trust the supplied information. This research utilizes a comprehensive literature review and bibliometric analysis to investigate the scholarly dialogue around ESG disclosure and strategies to counteract corporate “greenwashing”. This study’s objectives were achieved by bibliometric analysis, using the statistical programming tools R Studio R 3.6.0+, Biblioshiny 4.2.0, and VOSviewer 1.6.20. We acquired bibliometric data from the Scopus database for the period 2012–2024. We established the optimal sample size via the PRISMA methodology, including both inclusion and exclusion criteria. Greenwashing is a multifaceted issue that manifests in many forms, shapes, and intensities, as seen by the data. This obstructs the advancement of apparatus for prevention, quantification, and detection. Moreover, the results indicate that sustainable finance is adversely affected by greenwashing, particularly for green loans and green bonds. Moreover, the findings indicate that corporate greenwashing is a distinct kind of greenwashing.

1. Introduction

In addition to financial reporting, organizations regard environmental, social, and governance (ESG) disclosures, as well as sustainability reports, as complementary tools for enhancing accountability and transparency. However, the quality of these disclosures varies considerably among them, and companies do not encourage stakeholders to develop a thorough understanding of the information’s reliability. It remains a significant concern when ESG information is presented in a false or misleading manner. This is referred to as “greenwashing”, and it persists even though it is imperative that ESG disclosures be truthful, dependable, supported by evidence, comparable, and accountable. The reliability and veracity of ESG or sustainability reporting are compromised because of greenwashing, which undermines stakeholders’ trust in the information that has been disclosed (Birindelli et al., 2024; D. Li et al., 2024; J. Li, 2024).

Greenwashing may undermine a company’s brand, market performance, and consumer trust, perhaps resulting in boycotts. The degree of social acceptability of greenwashing influences the magnitude of its consequences. Notwithstanding the difficulties in identifying and quantifying greenwashing, many instances may remain unrecognized. Following a greenwashing controversy, distinctive marketing strategies are essential to restoring confidence. Allegations of greenwashing unjustly condemn corporations. Greenwashing is challenging to recognize and evaluate because of its many dimensions, manifestations, and nuances. The absence of a unified framework or criteria for evaluating environmental, social, and governance concerns, the dispersion of non-financial information across many sources, and the unavailability of trustworthy and complete data sets complicate the quantification of particular elements of the situation. The vast volume of longitudinal data and sustainability reports makes the evaluation of greenwashing laborious (Aronczyk et al., 2024; M. Li & Chen, 2024). Organizations have an extended period to conceal their operational activities. Social media artificial intelligence, content analysis, surveys, case studies, stimuli, experiments, regression analysis, calculation of greenwashing indicators, and analysis of disclosure reports are employed to identify greenwashing (Y. Wang et al., 2024a).

In recent years, there has been a significant increase in the quantity of review papers synthesizing research results on greenwashing, coupled with a corresponding growth in the number of studies focused on this subject. This collection of papers includes a variety of scholarly perspectives. However, the existing scientific literature lacks studies on the possible prevention of greenwashing in ESG reports and its characteristics. Therefore, this research, by applying the statistical method of bibliometric analysis, tries to investigate the avoidance of greenwashing in ESG disclosures. The novelty of this study is based on the contribution of its findings to the current discussion around the prevention, manifestations, levels, subtleties, and measurements of greenwashing in ESG disclosures. The bibliometric data were retrieved from the Scopus database for the period 2012 to 2024. This study was performed using the R statistical programming language, together with the bibliometric tools Biblioshiny and VOSviewer. Moreover, the PRISMA method was used to provide inclusion and exclusion criteria for the identification of appropriate bibliometric data samples.

This article is organized in the following manner: In Section 2, a literature survey on ESG reporting and greenwashing is presented. Section 3 delineates the materials and methodologies utilized to achieve the research objectives of the study. Ultimately, Section 4 delineates the results of the network and bibliometric analyses. Section 5 encompasses a comprehensive discussion of the implications, limitations, prospective avenues for future research, and findings.

2. Greenwashing: A Type of Corruption That Impacts Climate Risk

The literature contains a substantial amount of research on greenwashing in sustainable finance. Y. Wang et al. (2024b) offer a thorough examination of the factors that contribute to greenwashing, emphasizing the significance of both internal and external variables (Y. Wang et al., 2024a). They contend that businesses indulge in greenwashing for a variety of reasons, such as to enhance their company image, comply with legislative obligations, and respond to pressure from stakeholders. Moreover, Huang et al. (2024) investigate the rationale behind and impediments to the implementation of environmentally friendly supply chain management strategies, a critical domain in which greenwashing may manifest (Huang et al., 2024). They discover that, despite the substantial incentives for businesses to implement environmentally favorable practices, there are also significant challenges, such as the expense and a lack of legitimacy.

Furthermore, a significant area of research has been the examination of the impact of greenwashing on a company’s financial success and reputation. For instance, it has been determined that greenwashing may diminish a company’s reputation, which may result in a decline in consumer confidence and the possibility of financial penalties. Conversely, greenwashing may occasionally serve to improve a company’s financial performance by appealing to investors and consumers who prioritize environmental sustainability. Nevertheless, it is anticipated that this effect will be transient as consumers become more cognizant of the organization’s dishonest practices.

Another significant motif in the literature is the involvement of stakeholders in greenwashing. Stakeholders, particularly consumers and investors, play a critical role in the promotion or prevention of greenwashing. There are perceptions and responses of stakeholders to greenwashing can have a substantial impact on a company’s strategy. Also, consumers’ perceptions of a company’s corporate social responsibility initiatives may significantly influence their reactions to greenwashing. They are in favor of this concept. Additionally, this can offer valuable insights into the measures that can be implemented to combat greenwashing. For example, additional regulations and standards in sustainable financing are required to prevent greenwashing. Further research in the field emphasizes the significance of education and awareness in the fight against greenwashing.

Another significant area of investigation is the connection between sustainable development and greenwashing. Q. Peng and Xie (2024) posit that “greenwashing” may impede sustainable development by diverting resources from sustainable endeavors. He contends that greenwashing may result in a misunderstanding of sustainability, which can subsequently result in the inefficient use of resources. This concept demonstrates that greenwashing can result in skepticism and mistrust among consumers, thereby restricting the implementation of sustainable practices. There is a variety of sector-specific studies that provide evidence of greenwashing in the literature. Thus, the previous studies underscore the necessity of implementing measures that are specific to each industry to combat the widespread prevalence of greenwashing.

The relationship between sustainable finance and greenwashing is a multifaceted issue that is influenced by a variety of theoretical foundations, methodologies, and perspectives. It is imperative to comprehend the correlation between sustainable finance and technological innovations such as fintech. Digital financial solutions have the potential to reduce greenwashing activities by increasing transparency and safeguarding consumers, as per (Chueca Vergara et al., 2021). Moodaley and Telukdarie (2023) emphasize the capacity of artificial intelligence to evaluate sustainability reports for indicators of greenwashing, thereby providing a novel approach to enhance the credibility of corporate environmental disclosures (Moodaley & Telukdarie, 2023). Artificial intelligence is employed to further investigate this synergy.

3. Materials and Methods

Section 3 uses bibliometrics to clarify the findings. Bibliometric analysis is essential for examining the citation metrics and other statistical characteristics of research articles. Published research statistics may be analyzed through bibliometric methods. Researchers assert that bibliometric analysis is a legitimate approach for analyzing large scientific datasets. Advancements in discipline influence academic domains. Bibliographic analysis has enabled researchers to assess published works, identify emerging research trends, and understand collaborative dynamics. Furthermore, we must interrogate the database using suitable search terms.

Table 1. Keyword search formula. Source: own elaboration.

Step	Keyword Search
1	((“corruption” AND “ESG”))
2	((“corruption” OR “fraud”) AND “ESG”))
3	((“corruption” OR “fraud” OR “controversies”) AND “ESG”))
4	((“corruption” OR “fraud” OR “controversies”) AND (“corporate washing”) AND “ESG”))
5	((“corruption” OR “fraud” OR “controversies”) AND (“corporate washing” OR “greenwashing”) AND “ESG”))
6	((“corruption” OR “fraud” OR “controversies”) AND (“corporate washing” OR “greenwashing” OR “bluewashing”) AND “ESG”))
7	((“corruption” OR “fraud” OR “controversies” OR “money laundering”) AND (“corporate washing” OR “greenwashing” OR “bluewashing”) AND “ESG”))
8	((“corruption” OR “fraud” OR “controversies” OR “money laundering”) AND (“corporate washing” OR “greenwashing” OR “bluewashing” OR “pinkwashing”) AND “ESG”))
9	((“corruption” OR “fraud” OR “controversies” OR “money laundering”) AND (“corporate washing” OR “greenwashing” OR “bluewashing” OR “pinkwashing”) AND (“ESG” OR “sustainability” OR “sustainable development” OR “circular economy”) AND (“climate risk”))
10	((“corruption” OR “fraud” OR “controversies” OR “money laundering”) AND (“corporate washing” OR “greenwashing” OR “bluewashing” OR “pinkwashing”) AND (“ESG” OR “sustainability” OR “sustainable development” OR “circular economy”) AND (“climate risk”)) AND (LIMIT-TO (PUBSTAGE, “final”) OR LIMIT-TO (PUBSTAGE, “aip”)) AND (LIMIT-TO (SRCTYPE, “j”))

illustrates the compilation of these articles using keyword search methodologies. Initially, we used keyword search to conduct an extensive search of Scopus’s scientific article titles and terms from 2012 to 2024. These databases enhance the effectiveness of bibliographic analysis and literary study; thus, we selected them (Elshabshiri et al., 2025; Khan et al., 2023).

Authors, publications, and institutions are used to assess research efficacy. We illustrate the bibliographic connection using performance data and VOSviewer. We then provide data for analysis, emphasizing scientific mapping and performance assessment, two essential bibliometric elements. This research assesses bibliometrics using all three methodologies. Thematic maps and academic research topics are shown using Biblioshiny’s network analysis and performance evaluation metrics. Scientific mapping, network analysis, and performance assessment instruments enable researchers to assess their studies and enhance visualization. We evaluate the foremost authors, institutions, and journals by h-index, total citations, and publishing metrics. We identify phrases with analogous subjects via a clustering methodology (Khan et al., 2023).

The R software R 3.6.0+ offers sophisticated data analysis functionalities for this research. Bibliometrix is open-source software that analyzes scientific literature for the purpose of science mapping. This instrument facilitates researchers’ quantitative bibliometric assessment. Bibliographic data from Scopus are accurately imported using R-based RStudio version 3.6.0 or above. Diverse scientific fields have meticulously examined the significance of R and its libraries. The official website states that this study conducted a bibliometric analysis using the Biblioshiny online tool, which is a component of the Bibliometrix program, owing to its intuitive interface. This research’s software tools are accessible to everybody, particularly scholars. These gadgets can detect trends and deficiencies, as shown by research and databases. Individuals without computer proficiency or clustering knowledge may use Mendeley and VOSviewer to categorize articles. Data visualization and analysis require the evaluation of three hierarchical metrics: sources, authors, and documents. There are three categories of organized knowledge frameworks: an intellectual framework using network analysis and historical methodologies, a social framework employing connection network techniques, and a conceptual framework including network, factorial, and thematic mapping.

Data

The data utilized in this investigation were sourced from the Scopus database. Scopus is the most exhaustive database of scientific peer-reviewed literature, as provided by Elsevier BV, which is headquartered in the United States. There are more than 23,000 works in this compilation, which has been the subject of extensive scientific research by international publishers. It is the goal of this methodology to comprehend the theoretical underpinnings of the procedures in this field. This methodology is designed to identify research deficiencies and generate new opportunities for additional research. In addition, we implemented the PRISMA method. The PRISMA method (Figure 1) was employed to collect information, enabling us to determine whether it was feasible to conduct bibliometric analyses and identify pertinent scientific articles. The significance and trends of ESG in relation to greenwashing are the focus of a series of papers that exclusively address this subject. A comprehensive screening process was conducted for this investigation. To conduct an additional evaluation of the research, we restrict the document categories to exclusively research papers. To guarantee the consistency and uniformity of the articles investigated in this investigation, we implement this procedure (Galletta et al., 2024; Page et al., 2021; Smith et al., 2024).

The PRISMA flow diagram in Figure 1 illustrates the primary methodologies employed to systematically select publications for bibliometric research. The search query identified a total of 846 sources in the collection. Consequently, we restricted the number of articles, resulting in a reduction of the total to 653. We meticulously evaluated 431 research publications, excluding those that were too general or lacked a distinct relationship, as they were unsuitable for our current study. The primary objective of this investigation is to evaluate the impact of greenwashing on ESG reporting. We discovered that the titles or keywords of the specific sources we selected do not adequately capture the characteristics and specifics of the topic under investigation after conducting a thorough examination of the papers. The search parameters were modified to focus on research that was pertinent to the current investigation and to eliminate irrelevant references. Using this filtration procedure, a total of 319 academic publications were identified and incorporated into the bibliometric analysis.

In addition, the PRISMA methodology established the following inclusion and exclusion criteria to simplify the source selection process: (i) publication date; (ii) the correlation between ESG and greenwashing; (iii) language of publication (only English-language research studies are considered); and (iv) geographic factors, which encompass specific regions, states, countries, or populations. Therefore, each of these articles was incorporated into the bibliometric analysis.

4. Results

4.1. Network Analysis

Figure 2 depicts the yearly output of research articles on the influence of greenwashing in ESG reporting. From 2012 to 2021, publication growth was minimal, but, starting in 2022, there has been a significant increase in publications on the subject. The consistent expansion of ESG investment significantly intensified during 2013 and 2014, coinciding with the publication of the first study, indicating a correlation between strong company sustainability performance and favorable financial outcomes; nonetheless, 2018 is seen as the pivotal year for ESG. The year 2018 was the corporate proxy season for ESG, yielding many developing patterns that elucidate investor preferences likely to influence the following year’s shareholder campaigns. Shareholders are increasingly exerting their influence on environmental, social, and governance issues. Considering the increasing investor interest in ESG issues, firms who have not yet engaged in these themes should be urged to begin outreach and interaction with leading investors. These groups include stewardship, governance, and proxy voting teams that many investors possess, alongside conventional investor relations discussions with fund managers and security analysts. Consequently, academics’ interest in ESG increased progressively and intensified in 2024, highlighting the need to examine the relationship between ESG and corruption in the context of greenwashing (M. Li & Chen, 2024; Q. Peng & Xie, 2024; Zhao et al., 2024).

Figure 3 illustrates the extent of greenwashing and the journals with the highest number of publications in the field of ESG reporting. The journal Sustainability is situated at the top of the list. Its goal is to disseminate research papers that can improve the understanding of ESG from a global perspective and to provide practitioners with managerial insights and recommendations to help them develop and improve ESG strategies. The second position on the list is held by the journal Corporate Social Responsibility and Environmental Management (Fernandez, 2025; Jiang et al., 2024; W. Li et al., 2024). Its goal is to contribute to the existing body of knowledge by publishing papers that examine the relationship between ESG factors and their role in mitigating the risks associated with greenwashing practices in the financial sector. As a result, the subject is the lack of research on the correlation between the risks of greenwashing and the adoption of ESG practices by financial institutions to mitigate those risks. Additionally, the primary goal of this project is to examine the diverse ESG strategies that have the potential to reduce the negative repercussions of greenwashing and to provide regulators with guidance on how to prevent financial institutions from engaging in dishonest environmental activities. The third most prolific source of publications on the subject is the Journal of Finance Research Letters. One of the most recent and influential research studies published by this journal underscores an alternative connection between ESG reporting and greenwashing, specifically the investigation of ESG greenwashing in fintech companies. Specifically, a study titled “The impact of bank fintech on ESG greenwashing” examines the ways in which bank fintech influences ESG greenwashing, thereby contributing to the existing body of knowledge on ESG greenwashing and the literature on the financial implications of fintech in banks. Further, this research proposed a method for evaluating firm-level bank fintech by employing text analysis to identify fintech patents among all banks’ patents and loan-by-loan data to attribute a firm-level weight to bank fintech. Also, another crucial contribution of this research to the topic under investigation is the authors’ utilization of the moderating effect model to examine the fundamental mechanisms that influence the impact of bank fintech on ESG greenwashing. In addition, the journals Environment, Development and Sustainability (14 publications) and Energy Economics (13 publications) are among the top five sources with the most publications in the field.

Table 2. Most impactful research publications in the field. Source: Scopus/R studio.

Paper	Total Citations	TCs per Year	Normalized TCs
Greenwashing in environmental, social and governance disclosures (Yu et al., 2020)	405	67.50	3.38
Corporate social responsibility governance, outcomes, and financial performance (Z. Wang & Sarkis, 2017)	388	43.11	1.00
CSR Performance and the Readability of CSR Reports: Too Good to be True? (Z. Wang et al., 2018)	230	28.75	1.00
ESG did not immunize stocks during the COVID-19 crisis, but investments in intangible assets did (Demers et al., 2021)	211	42.20	4.81
Is corporate social responsibility reporting a tool of signaling or greenwashing? Evidence from the worldwide logistics sector (Uyar et al., 2020)	159	26.50	1.33
Green financial system regulation shock and greenwashing behaviors: Evidence from Chinese firms (Zhang, 2022b)	155	38.75	4.63
Stakeholder legitimacy in firm greening and financial performance: What about greenwashing temptations? (Lee & Raschke, 2023)	134	44.67	6.31
Are firms motivated to greenwash by financial constraints? Evidence from global firms’ data (Zhang, 2022a)	119	29.75	3.55
What Do We Mean by Sustainable Finance? Assessing Existing Frameworks and Policy Risks (Migliorelli, 2021)	102	20.40	2.33
Corporate uptake of the Sustainable Development Goals: Mere greenwashing or an advent of institutional change? (Lashitew, 2021)	100	20.00	2.28

summarizes the most pertinent and influential research papers in the field. The first research paper on the list is “Greenwashing in environmental, social, and governance disclosures” by Yu et al. (2020). In this paper, the mechanisms that can be implemented to mitigate the extent of greenwashing behavior in ESG dimensions among firms are comprehensively examined. According to the authors, “greenwashers” are organizations that appear to be transparent and disclose a significant quantity of ESG data but fail to exhibit adequate performance in ESG-related areas. The authors quantify the degree to which large-cap firms employ greenwashing by calculating peer-relative greenwashing scores for a cross-country dataset that comprises 1925 large-cap firms. The most critical discoveries of this research were the demonstration of evidence that greenwashing behavior in ESG dimensions can be discouraged by scrutiny from (i) independent directors, (ii) institutional investors, (iii) influential public interests through a less corrupted country system, and (iv) being cross-listed. Additionally, the findings suggest that the two governance factors at the firm level are the most effective in minimizing the misleading disclosures of firms regarding ESG dimensions. The research paper titled “Stakeholder legitimacy in firm greening and financial performance: What about greenwashing temptations?” published by Lee and Raschke (2023) had the highest normalized total citations (TCs), even though this paper has the most citations. In particular, the normalized TC index of this study is 6.31, which suggests that it is dynamically related to the other studies in the list.

4.2. Bibliometric Analysis

The Sankey diagram, or three-field plot, of the cited references, including the authors, authors’ countries, and terms, is illustrated in Figure 4. Many companies and investors are concerned about greenwashing because of the legal, financial, and reputational risks. Thus, it is logical that ESG raters would evaluate it as a risk exposure factor and a controversy in their ratings. This research’s Sankey diagram demonstrates that greenwashing is a significant concern that numerous companies and investors address because of the legal, financial, and reputational risks. Thus, it is logical that ESG raters would evaluate it as a risk exposure factor and a controversy in their ratings. The graph can also provide a more detailed explanation of the significance of ESG ratings and the necessity for companies and ESG raters to comprehend the risks of greenwashing and incorporate pertinent information into their ratings. Since stakeholders of businesses depend on ESG ratings to provide a precise representation of the health, risks, and prospects of companies by avoiding greenwashing risks, this can affect three fundamental aspects of their expectations of ESG raters (Jiang et al., 2024; M. Li & Chen, 2024; Tong et al., 2024). Specifically, ESG can assist companies in evaluating their ESG practices and performance, with the objective of preventing the misrepresentation of stakeholders and investors by meticulously scrutinizing and evaluating claims for accuracy. Moreover, ESG encourages companies to enhance their performance in order to bolster investor trust by promoting corporate accountability and transparency. However, rating credibility is jeopardized by unaddressed greenwashing. Furthermore, businesses can provide investors with dependable information by implementing ESG, which aids them in making informed decisions by enabling them to align their portfolios with sustainable and responsible companies.

In addition, the findings emphasize the significance of green innovation in opposition to greenwashing, which can assist businesses in the preservation of their ESG reporting process. It has been demonstrated over the past five years that ESG strategies can inspire companies to pursue green innovation and encourage them to incorporate environmental protection policies into their development blueprints. This empowers them to enhance environmental protection by means of market signals. Greenwashing, on the other hand, is the practice of firms making deceptive or deceitful claims about their proactive environmental behaviors to establish a green image (D. Peng & Kong, 2024). This decoupling between environmental claims and environmental actions can have a detrimental effect on their green innovation practices. In addition to reducing the incentives for greenwashing, businesses that engage in green innovation can also make a genuine contribution to environmental protection, thereby nurturing a “win–win” scenario for both corporate development and sustainability. Additionally, green innovation can enhance the prevention of greenwashing by enabling businesses to take risks, which in turn promotes a more stable financial environment. Furthermore, it can stabilize the governance framework by augmenting the diversity of administrators in terms of their gender and environmental context. The heterogeneity experiments have demonstrated that this pathway is particularly effective in companies with significant pollution and increased economic performance.

For example, in supply chains, green innovation integration means providing maximum value to customers quickly and at a low cost, by integrating and optimizing internal and external operational processes through strategic cooperation with supply chain partners, thereby achieving efficient service flow, product flow, information flow, or capital flow. From the perspective of supply chains, internal integration requires all functional departments of the enterprise to work together to form an organic whole, while external integration refers to the integration of the enterprise and external organizations. Thus, the combination of the above can lead to a greenwashing free business that can achieve sustainable business continuity.

Figure 5 depicts a thematic map that aids in recognizing the intellectual underpinnings of the subject matter. A thematic map aims to enhance comprehension of the present state of the field and its prospects for future sustainability. This study is beneficial as it provides researchers and stakeholders with insights into the prospects for future research advancement in theme domains within a certain topic. Thematic analysis is a strategy that involves examining the links among groups of writers’ keywords to discern themes. These elements are characterized by their centrality and density. The vertical axis denotes density, while the horizontal axis signifies centrality. Density measures the cohesion of nodes, while centrality assesses the extent of linkage across different themes. The depth and importance of certain topics are dictated by these two attributes. As the quantity of connections among nodes in the theme network escalates, a node attains more centrality and importance. It has the most crucial role inside the network. Likewise, the cohesiveness of a node, an indicator of the density of a research domain, influences its ability to persist and grow.

Moreover, the thematic map depicted in Figure 5 demonstrates the influence of greenwashing on ESG reporting. The map is primarily divided into four quadrants (Q1 to Q4). The primary motifs are shown in the upper-right quadrant (Q1), and the fundamental topics are presented in the bottom-right quadrant (Q4). Highly specialized themes are situated in the upper-left quadrant (Q2), whilst emerging or declining themes are found in the lower-left quadrant (Q3). The thematic map findings reveal a significant association between corporate governance and greenwashing, affecting ESG reporting. The board of directors’ pivotal role in the execution of greenwashing is shown by the specialist issues in the thematic map. The examination of the relationship between corporate governance and greenwashing may facilitate the selection of CSR committees to enhance their environmental performance and diminish the incidence of greenwashing (Koch & Denner, 2025; J. Wang et al., 2024). This examination of the CSR committee’s indirect participation may improve the understanding of board characteristics and greenwashing.

A board with a diverse skill set is believed to enhance internal control, consequently alleviating issues related to CSR and aiding in the comprehension of environmental information distribution. The thematic map clarifies the connection between environmental communication and greenwashing individual issues. The phrase “greenwash” denotes a range of misleading communications designed to cultivate an excessively favorable impression among stakeholders about an organization’s environmental initiatives (M. Li & Chen, 2024). The surge of assertions about corporate social responsibility hinders stakeholders’ capacity to distinguish between companies that really uphold their ethical conduct and those that just superficially endorse a sustainable development framework. It is essential to understand and assess the impact of various deceptive environmental communications on the public’s views of corporate environmental responsibility and greenwashing. This is shown in the thematic map, which examines the issue through the lenses of legitimacy and signaling theory.

Moreover, environmental communication may function as a crucial element in demonstrating an organization’s dedication, advancement, and impact, rendering it an optimal cornerstone for ESG engagement. Almost fifty percent of chief executive officers (CEOs) indicate that they face pressure to explain their organization’s ESG policies and to convert this information into a compelling story. To enhance their ESG strategy, firms must consider how they communicate their messages. When executives resonate with the appropriate chord, it will inspire others to commence their participation. Organizations may design an outreach plan using both public relations and marketing strategies to manage feedback from investors. As customers become more wary of greenwashing, it is imperative to maintain transparency and authenticity in the current market. Consequently, it is essential to be candid about the methods requiring enhancement. Jargon should be avoided, as with any kind of communication.

Additionally, the results of the co-occurrence analysis, which utilized the most germane and significant terms associated with the subject matter under investigation, are depicted in Figure 6. The purple cluster seems to be the most significant of the clusters that were produced in this investigation. This cluster is a prime illustration of the critical role of ESG in reducing the risk of greenwashing. The significance of transparency in the battle against greenwashing and ESG aspects is illustrated by the prevalence of the associated terms. Transparency serves as a conduit between organizations and their stakeholders, providing a comprehensive understanding of the company’s ESG activities. Furthermore, ESG transparency encompasses the company’s commitment to sustainable and ethical business practices, as well as the disclosure of its actions. Transparency is essential for ESG to guarantee that corporations are held accountable for their actions. Transparency is the act of disclosing pertinent information about a company’s governance processes, environmental impact, and social responsibility. This information is indispensable for stakeholders, including investors, consumers, and laborers, to make well-informed decisions. The adoption of sustainable practices by corporations is influenced by the transparency of ESG. Companies are significantly more likely to fulfill their obligations when they disclose their environmental, social, and governance (ESG) metrics. Transparency fosters accountability, which in turn encourages corporations to accomplish their ESG objectives (Y. Wang et al., 2024b).

Also, the transparency of ESG reporting can reveal instances of greenwashing by revealing a company’s genuine practices. The disclosure of a company’s ESG activities allows stakeholders to assess the credibility of its claims. Furthermore, transparency may serve as an indicator of whether a company’s ESG initiatives are authentic or solely a form of greenwashing. A corporation may claim to invest in renewable energy; however, a truthful report would disclose the extent of this investment. This applies if the firm is only obtaining renewable energy credits while mostly depending on fossil fuels for its energy requirements. This level of openness may expose instances of greenwashing and enforce corporate accountability for ESG assertions. In the United Kingdom, the Sustainability Disclosure Requirements represent a series of reforms that compel companies to implement the Green Taxonomy and comply with the recommendations of the Task Force on Climate-related Financial Disclosures, along with the International Sustainability Standards Board, subject to forthcoming consultation. The changes include mandates for transition planning and reporting for private enterprises. Consequently, the regulations suggest that ESG reporting may facilitate the prevention and identification of greenwashing incidents. Furthermore, the approaches may improve the quality of ESG reporting and clarify the underlying message of greenwashing.

Furthermore, transparency not only exposes greenwashing but also significantly reduces it (Buertey et al., 2020; Hasan et al., 2023). Companies are less likely to engage in greenwashing when they are aware that they will be held accountable for their ESG claims. Furthermore, transparency may influence investor decisions. Investors are increasingly integrating ESG factors into their investment decisions. Investors who prioritize sustainability are more inclined to invest in organizations that are transparent regarding their ESG initiatives. This has the potential to initiate a positive cycle that motivates organizations to enhance their transparency and sustainability, thereby decreasing the prevalence of greenwashing. In conclusion, the prevention of greenwashing in the ESG era is contingent upon transparency. It discloses greenwashing strategies and guarantees that companies are held accountable for their ESG claims. Furthermore, it plays a critical role in the struggle against greenwashing by promoting genuine sustainability initiatives and influencing investor decisions (Chen, 2024; Gompers et al., 2003; X. Liu et al., 2025).

The co-occurrence study investigates the phenomenon of greenwashing in sustainable finance, elucidating its impact on bonds and loans, the repercussions it entails, and the role of legal entities in promoting transparency and ethical practices within the sector. Greenwashing occurs when companies or investment products falsely claim to adhere to sustainability and ESG principles. The perception of a company’s genuine commitment to sustainability may be distorted by these misleading claims, which may take various forms and entice investors who prioritize social responsibility. Investors’ demand for green bonds and loans has significantly increased in recent years in response to the growing ESG concerns. A green bond is distinguished from a standard bond by its distinctive designation, which signifies a dedication to exclusively using the funds raised to finance or refinance projects, assets, or business activities that meet environmentally sustainable standards (Mohammed et al., 2024; Xin et al., 2024). A green loan is intended to provide financing for initiatives that satisfy environmental standards, much like a green bond. The distinction is found in the operation’s magnitude and nature. Green loans are typically executed privately and are smaller in size, whereas green bonds typically involve larger quantities, incur higher transaction costs, and may be listed on an exchange or posted privately.

Greenwashing is regrettably not an uncommon occurrence in the global green bond market. Greenwashing also raises concerns regarding financial stability, in addition to impeding the advancement in the struggle against climate change. The divestment and re-evaluation of a company’s green bonds may be prompted by the disclosure of its deceptive greenwashing practices, as investors are adopting environmental and sustainability factors into their investment strategies. Exposure of a significant number of green bond issuers as greenwashing offenders could result in a significant outflow of capital, which could exacerbate price fluctuations in the green bond market. Additionally, the cascading effect may be extended to incorporate other interconnected sectors, such as green index funds, ESG/SRI funds, and green equities (Bhutta et al., 2022; Dong et al., 2024; Mitchell et al., 2024).

5. Discussion

In 2025, the reporting of ESG themes is swiftly establishing itself as the normative practice in business, with leading businesses pledging to achieve net-zero emissions and governmental bodies formulating rules and legislation. Investors are gaining a unique insight into the environmental consequences of corporate activities due to this development. ESG reporting is progressively mirroring financial reporting, since the latest standards include both qualitative and quantitative disclosure requirements. Nonetheless, financial outcomes are rigorously observed and managed. ESG reporting currently lacks the same degree of rigor, even while financial statement reporting complies with standards and employs stringent controls to guarantee the consistency, accuracy, and comparability of data and disclosures. As a result, a divergence may occur between a company’s activities and its assertions. This mismatch, sometimes unintended, adversely affects investors, consumers, workers, and anyone reliant on this information for decision making. This behavior is usually termed “greenwashing,” especially in relation to sustainability (Aronczyk et al., 2024; Y. Ma & Ahmad, 2024).

Greenwashing is a strategy used by companies to present themselves as more environmentally friendly than they really are. Greenwashing, whether via the propagation of misleading information about a product’s sustainability or the mislabeling of a fund as “green” when it is not, may have significant consequences and undermine confidence. It is essential to recognize that greenwashing is not a static term; instead, it exists on a spectrum, ranging from overt deceit to optimistic belief. A corporation encounters several risks due to greenwashing (Koemtzopoulos et al., 2025; Zournatzidou, 2024; Zournatzidou et al., 2024). The initial effect of ESG data quality on disclosures is variable because of inconsistencies in its accuracy and completeness. Product suppliers have significant challenges in gathering the necessary data to ensure compliance with sustainability requirements. This is particularly vital for firms that underwrite policies when there is ambiguity around the available or necessary data points or what defines an acceptable ESG profile (Brandão et al., 2023; Z. Li et al., 2024b).

Moreover, regulatory inadequacies and inadequate standards substantially enable the perpetuation of greenwashing tactics. The absence of mandatory legislation and sufficient standards permits the perpetuation of greenwashing practices without consistent accountability measures. Moreover, the absence of clear legislation intensifies the problem by offering opportunities for unintentional greenwashing. In the lack of clearly defined norms, firms may unintentionally use practices that mislead consumers on their environmental impact. Furthermore, firms must recognize the substantial reputational risk linked to greenwashing. Mere rumors or suspicions of greenwashing may significantly damage a company’s reputation. Consumer tolerance for greenwashing has significantly diminished, and the rapid spread of knowledge via social media, coupled with customers’ ability to boycott brands, offers substantial risks to firms that make claims not substantiated by genuine actions (Jiang et al., 2024; Ragazou et al., 2024). The potential repercussions and erosion of customer trust may have enduring effects on the company’s reputation.

However, the current study underscored supplementary challenges for organizations in relation to greenwashing and its impact on ESG reporting. ESG greenwashing poses significant risks in terms of governance. In order to ensure transparency and prevent deceptive assertions, it is essential to establish robust governance frameworks. Directors are required to ensure that all environmental assertions are accurate, well-documented, and consistent with the organization’s overarching strategy and business model. This necessitates a commitment to transparency, meticulous documentation, and rigorous supervision. As a result, directors must ensure that their environmental assertions are accurate and substantiated when corporations address the increasing demand for sustainable practices. Greenwashing not only poses significant risks but also undermines the credibility of genuine environmental initiatives. Directors can safeguard their organizations from the perils of greenwashing and advance a more sustainable future by adhering to rigorous governance standards and fostering transparency.

The purpose of sustainability/ESG communications is to support companies in their long-term strategic endeavors, identify and mitigate substantial risks, and recognize potential growth opportunities. Although there was a decrease in the number of anti-ESG measures implemented in 2024, their deterrent effect persists, and there is still significant stakeholder pressure to address social concerns. A more integrated approach may be achieved by acquiring more exhaustive ESG data for specific topics, which will enable more informed decision making, improved public policy outcomes, and enhanced brand messaging. Nevertheless, it is imperative to evaluate the potential hostility of detractors toward these objectives. Companies should be prepared to provide responses that emphasize the business rationale behind their operations, demonstrating their alignment with long-term value development and risk management (C. Ma et al., 2023; Shvetsova & Lee, 2021).

This bibliometric investigation revealed the influence of greenwashing on loans. Greenwashing refers to the promotion of items as environmentally friendly or sustainable despite their failure to meet such criteria. In such cases, the loans may not really provide significant environmental advantages or may even promote ecologically harmful practices. Greenwashing may transpire when (i) a loan is promoted as financing environmentally sustainable projects, yet the capital is not solely allocated for such purposes; (ii) lenders inadequately assess the environmental ramifications or sustainability qualifications of the projects or activities financed by the loan; or (iii) they utilize imprecise or ambiguous terminology to articulate the environmental advantages of a loan without detailing its actual ecological impact (Z. Li et al., 2024a; J. Y. Liu et al., 2024). Thus, lenders may reduce the incidence of greenwashing in loans and provide borrowers with authentic possibilities to finance ecologically friendly projects by adopting effective strategies. This approach promotes responsibility, credibility, and openness in the financial sector’s efforts to enhance sustainability.

The results of this study may improve the current business environment and scholarly discussion. The literature emphasizes a critical aspect of greenwashing: the understanding of ESG finance, an investment strategy that integrates environmental, social, and governance concerns. These factors are assessed in conjunction with conventional financial metrics to ascertain a company’s social impact and sustainability. The primary objective of ESG finance is to ensure that investments are economically advantageous while conforming to ethical, sustainable, and socially responsible criteria. The rising consumer demand for sustainable and ethical investments has resulted in an augmented need for ESG standards and regulations to effectively eliminate practices such as greenwashing. The regulation mandates institutions to provide comprehensive reports on governance, risk management, strategy, scenario analysis, and metrics. Businesses may use the findings for pragmatic insights, augmenting transparency, which is crucial for effectively combating greenwashing. Transparent reporting promotes accountability, nurtures confidence, and guarantees that sustainability claims correspond with actual actions. Attaining transparency in reporting may be difficult without rigorous regulations and industry norms (Y. Wang et al., 2021).

Additionally, further policy recommendations to mitigate ESG pitfalls that may lead to greenwashing include advising policymakers to assist businesses in establishing a comprehensive ESG governance framework, initiated by unequivocal support from management and the board, and integrating ESG considerations into both new and existing risk management protocols and controls. Additionally, by instituting training programs to enhance the competencies of the board, management, and professionals with the fundamentals of ESG, including the associated risks and opportunities. A profound understanding of the complexities inherent in establishing and properly reporting ESG objectives is essential, beginning with education. Furthermore, being informed about the evolving regulatory environment will facilitate comprehension that adherence to both new and current regulations can reduce the risk of inaccurate reporting, although necessitating substantial time, effort, and resources. Moreover, authorities should assist enterprises in developing a scenario plan to address possible greenwashing risks, acknowledging the changing attitudes of carbon offsets, renewable energy certifications, and other emission reduction mechanisms. Companies that depend on specific strategies to achieve objectives now may face allegations of greenwashing tomorrow, irrespective of their adherence to regulations. Significantly, the concerns of greenwashing are not confined to the environmental aspect of ESG; they also permeate social and governance aspects.

Finally, individuals choose to engage in commerce with and seek employment at firms they trust, and it is those organizations that openly disclose the who, what, when, where, why, and how of their ESG strategy and reporting program that will cultivate that confidence. Ultimately, even within this changing regulatory landscape, ESG transcends mere compliance; it encompasses value creation, competitive differentiation, and the enhancement in long-term resilience. Future research will concentrate on finding the most relevant authors’ keywords related to ESG and greenwashing, using entropy and TOPSIS multicriteria methods to assess and rank these attributes, therefore increasing awareness in the field.