When green turns red: Is the perception of greenwashing a barrier to individual green investment?

• Perceived greenwashing is a barrier to individual investors’ green investments. • Greenwashing deters current green investments and future investment intentions. • Negativity bias: high greenwashing reduces investment; low has no positive effect. • Negative emotions and risk mediate how greenwashing impacts green investing. Based on a survey of 2,215 French investors, this study examines the impact of greenwashing perception on individual investment decisions. Our findings reveal that greenwashing perception is negatively related to green investing. Specifically, A one-point increase in greenwashing reduces investment likelihood by 1.68 percentage points. This perception discourages traditional investors from considering green funds and dissuades existing green investors from increasing their green investments. Moreover, consistent with negativity bias, low perceptions of greenwashing have no positive effect on green investments, while high perceptions negatively affect them by triggering negative emotions that heighten risk perception and deter green investment.