Examining the Role of Corporate Governance and ESG in Curbing Energy Intensity of Indian Manufacturing Firms: An ESG Greenwashing Perspective

ABSTRACT The current study centres on assessing the impact of corporate governance and ESG on the energy intensity of manufacturing firms in an Indian setting. Specifically, we examine whether the ESG mechanism aids in enhancing environmental sustainability practices or contributes to corporate greenwashing. We use a panel dataset of 325 listed Indian manufacturing firms for the period spanning from 2011 to 2023 and employ the two‐step system GMM method for empirical analysis. We exhibit that corporate governance is efficacious in minimising the firm‐level energy intensity. On the contrary, the ESG mechanism fails to reflect higher energy efficiency as it holds a positive nexus with energy intensity. Our study confirms evidence of greenwashing behaviour linked to Indian manufacturing firms through ESG. We discern that the ESG mechanism is strategically used to mislead customers and investors and reflects a mere symbolic action of sustainability reporting. Heeding such study outcomes, we provide policy suggestions for improving ESG as well as the environmental sustainability framework for Indian manufacturing firms.