Greenwashing and environmental communication: Effects on stakeholders' perceptions

TLDR

Corporate environmental performance has risen since the 1970s, yet the concurrent increase in greenwashing—misleading communications that create overly positive stakeholder beliefs—has made it difficult to distinguish genuine sustainability from superficial claims. The study aims to assess how different types of misleading environmental communications influence stakeholders' perceptions of corporate environmental responsibility and greenwashing, and how they respond to environmental scandals. Using legitimacy and signalling theory, the authors conduct a four‑for‑two design experiment to evaluate the effects of misleading communications and stakeholder reactions to environmental scandals. Results show that varying levels of greenwashing significantly alter stakeholders' perceptions of corporate environmental responsibility and their reactions to environmental scandals.

Abstract

Abstract Since the first Earth Day in the 1970s, corporate environmental performance has increased dramatically, and cases of greenwashing have increased sharply. The term greenwash refers to a variety of different misleading communications that aim to form overly positive beliefs among stakeholders about a company's environmental practices. The growing number of corporate social responsibility claims, whether founded or not, creates difficulties for stakeholders in distinguishing between truly positive business performance and companies that only appear to embrace a model of sustainable development. In this context, through the lens of legitimacy and signalling theory, we intend to understand and assess the different influences that various types of misleading communications about environmental issues have on stakeholders' perceptions of corporate environmental responsibility and greenwashing. Stakeholder responses to an environmental scandal will also be assessed. The hypotheses tested through a four‐for‐two design experiment reveal that different levels of greenwashing have a significantly different influence on stakeholders' perceptions of corporate environmental responsibility and stakeholders' reactions to environmental scandals.