Unveiling ESG realities: Fuzzy AHP assessment of greenwashing in investor portfolios

Purpose Greenwashing is a deceptive tactic frequently used by business houses to falsely tout their environmental credentials and present investors with a more sustainable image. This study examines and prioritizes the key factors that influence investor behavior in the context of sustainable investment decisions and tackling the issue of greenwashing. Design/methodology/approach The Fuzzy AHP model was employed to examine the responses obtained from 310 equity investors in North India. Findings The results of the study identified that the three most significant factors that influence investor behavior when making rational investment decisions and confronting greenwashing are Portfolio Management Practices, Cognitive Biases and Media and Public Perception. Research limitations/implications The current study has applied the Fuzzy AHP technique to prioritise and rank various factors. Subsequent investigations can validate the above findings using other concrete statistical tools. Moreover, future studies can focus on other dimensions such as the role of literacy campaigns, corporate digital transformation, incentives and compensation structures of organizations, engagement with stakeholders and compliance with ESG standards to enrich the existing knowledge base in this context. Practical implications This study provides valuable insights to investors, companies, regulators and policymakers, ESG rating agencies, and academic and research communities. It elevates investor comprehension of greenwashing and its implications, making them more cautious while investing. Findings also draw the attention of policymakers to the need to implement stringent regulations to curb greenwashing. Originality/value To the best of the author’s knowledge, the present study is a maiden attempt to prioritize the factors having a significant influence on investor behavior in this era where companies are largely involved in greenwashing practices.