Cognitive biases and greenwashing in corporate sustainability: Biased to deceive

The focus of this research is the importance of cognitive bias in facilitating the greenwashing of companies when marketing their goods and services as sustainable. This research looks at cognitive biases like confirmation bias, the halo effect, and cognitive availability, and how they impact both the psychological phenomena that drive particular corporate activity and the perception of the consumer. Using case studies in the theoretical framework and other empirical evidence, the study attempts to show how corporate entities mislead consumers by overstating the environmental benefits of their products relative to the reality of the environmental benefits and how this enhances or diminishes consumer confidence and impacts the sustainability movement. The mixed methods in netnographic research and qualitative analysis which involved the study of 50 online interviews and 124 posts and comments digital postings to address and explain the cognitive bias that begets greenwashing and the study attempts to explain the behavior and perception and response of firms to environmental deception, and for the quantitative part, the four hundred forty-seven respondents from firms involved with green products and green activity in different geographical locations in India. Given the nature of the proposed relationships and the complexity of the relationships involved, Structural Equation Modeling (SEM) was employed to test the proposed relationships since it is able to provide answers to several variables at the same time. This research identifies and demonstrates the cognitive biases of over-optimism, narrow framing, and hyperbolic discounting, which impact greenwashing behavioral tendencies. Moreover, the research seeks to test whether the audit process and market gain act as moderators between the stated variables and greenwashing. This study begins to address the very limited research on the behavioral and cognitive biases of firms in relation to greenwashing. In particular, this research helps understand the burgeoning practice of greenwashing, the cognitive biases that are driving its proliferation, and the potential strategies that could be employed to reduce its impact.