Greenwashing and Environmental Communication: Effects on Stakeholders’ Perceptions

Abstract

Since the first Earth Day in the 1970s, corporate environmental performance has increased dramatically, and cases of green-washing have increased sharply. The term green-wash 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 green-washing. 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 green-washing have a significantly different influence on stakeholders' perceptions of corporate environmental responsibility and stakeholders' reactions to environmental scandals.

Keywords: green-washing, environmental communication, signaling theory, legitimacy theory, experiment, corporate social responsibility

JEL Classification: M10, M14, M41