Detecting Greenwashing Behaviour in Decarbonization Performance

ABSTRACT This study proposed a novel method to detect greenwashing attempts in the green transition toward net‐zero. Our findings indicate a positive relationship between environmental, social and governance (ESG) scores and absolute carbon emissions/intensities, with the link being more pronounced in highly internationalised companies. Further analysis suggests that ESG scores are often used for strategic greenwashing (i.e., impression management), diverting attention from the lack of net‐zero commitments. Our study provides an alternative approach to measure such unethical corporate behaviour, and we find that large companies frequently invest heavily in promoting their ESG scores rather than decarbonisation projects.