Greenwash vs. Brownwash: Exaggeration and Undue Modesty in Corporate Sustainability Disclosure
Open accessAbstract
Corporate greenwash has accelerated in recent years, bringing in its wake growing skepticism about corporate green claims. Although a theory of the drivers and deterrents of greenwash has begun to emerge, it is static in nature and does not incorporate the full range of ways in which firms can misrepresent their environmental performance. Our contribution is three-fold. First, we extend the theory of organizational information disclosure to incorporate the possibility of undue modesty about a firm’s environmental, social and governance practices. Second, we hypothesize about the drivers of exaggeration and undue modesty based on which of a firm’s stakeholders are salient at a given point in time; to do so we place the firm within a dynamic context that has largely been missing in the prior literature. Third, we test our hypotheses using a dataset that allows us to directly compare corporate green claims against actual performance. Results reveal that corporate output growth, deregulation, and low profits under deregulation significantly affect the choice between greenwash and brownwash. The effects of growth and profits are mitigated by external scrutiny.
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Greater scrutiny from stakeholders and society can produce environmental disclosures that are more accurate, more substantive, or even overly modest.
“increased scrutiny by stakeholders and society at large can lead to moreaccurate (Marquis, Toffel, and Zhou, 2016), more-substantive (Marquis and Qian, 2014), or even overly modest disclosures (Kim and Lyon, 2015).”
From Strategic Silence: Withholding Certification Status as a Hypocrisy Avoidance Tactic (2018) · cites this paper as Kim and Lyon, 2015
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“…of consumers and investors regarding a firm or its products, but it is deterred by scrutiny from external stakeholders such as environmental activists who can detect and punish greenwashing (Lyon and Maxwell 2011, Lyon and Montgomery 2013) and by regulatory pressures (Delmas and Burbano 2011).”
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“Researchers could utilize the Taxonomy Regulation ’ s classi fi cation scheme to detect green-washing (Kim & Lyon, 2015; Lyon & Montgomery, 2015) and potentially manipulative reporting.”
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- Authors
- Kim, E.-H., & Lyon, T. P.
- Affiliations
- George Washington University (US)
- University of Michigan (US)
- Venue
- Organization Science
- Published
- 2015-06
- Volume
- 26
- Issue
- 3
- Pages
- 705-723
- ISSN
- 1047-7039 (ISSN-L)
- 1526-5455
- OpenAlex
- W2118845980
- Cited by
- 932
- References
- 10
- Citations by year
- 2026: 239 · 2025: 194 · 2024: 154 · 2023: 100 · 2022: 72 · 2021: 41 · 2020: 36 · 2019: 21 · 2018: 18 · 2017: 41 · 2016: 10 · 2015: 3 · 2014: 2
- FWCI
- 57.27
- Type
- journal article
- Language
- en
- Open access
- green
- doi.org
- Locations
- Organization Science (publishedVersion)
- SSRN Electronic Journal (acceptedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Social Responsibility Reporting
- Social Sciences › Business, Management and Accounting › Marketing › Environmental Sustainability in Business
- Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Identity and Reputation
- Keywords
- greenwashing, corporate sustainability disclosure, stakeholder salience, deregulation, corporate profits, external scrutiny
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