Joining a flagship index actually predicts more corporate greenwashing.

Companies often talk a big game about helping the planet, but their real actions might not match their words. Researchers call this greenwashing. To measure it, scientists looked at the gap between what companies say about the environment and their real pollution numbers. They studied 200 large European firms from heavy-polluting industries. They tested which company traits make this gap bigger or smaller. They found that companies listed on major market indexes have a much wider gap. These famous firms talk up their green credentials far more than their actual emissions justify. Endorsing climate reporting frameworks also points toward a wider gap. But companies that spend money on green equipment or use renewable energy shrink the gap, backing up their claims with real work. Board oversight and monitoring did not matter. Crucially, swapping the rating agency measuring their words completely changed the results, proving that greenwashing scores depend heavily on who grades them.

Why it matters

Investors and regulators rely on ESG ratings to spot greenwashing. This study shows that a firm's inclusion in a prominent sustainability index is actually a strong predictor of a wider gap between its environmental talk and its real emissions. The rating lens you choose can flip the verdict on whether a company is greenwashing.

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