Environmental, Social, and Governance (ESG) Factors and Green Productivity: The Impacts of Greenwashing and Competence Greenwashing on Sustainable Finance and ESG Investing

APO Productivity Insights Vol. 2-11 (2022)

32 Pages Posted: 10 Jan 2023 Last revised: 14 Apr 2023

See all articles by Kim Schumacher

Kim Schumacher

Kyushu University - Institute for Asian and Oceanian Studies; Tokyo Institute of Technology - School of Environment and Society; University of Oxford - School of Geography and the Environment

Date Written: December 15, 2022

Abstract

The rise of sustainable finance, ESG investment, and sustainability reporting, has gradually led to a growing disconnect among many financial-sector and corporate stakeholders, which can be observed between their positive sustainability performance claims and the organizational resources and capacities dedicated to assuring proper ESG integration and sustainability impact MRV.

These discrepancies can easily result in greenwashing or carbonwashing, which are the practices of marketing products or services as “green”, “sustainable”, "carbon neutral", "net zero" or "nature positive" when in fact they do not meet basic environmental, climate, or sustainability standards of verifiability or credibility. Competence greenwashing is the professional ESG skills-related equivalent that relates to overstated claims of environmental competence or non-financial sustainability-related expertise in absence of material or credible educational or professional track records.

However, greenwashing and its subvariants like “carbonwashing” or “competence greenwashing” do not occur in a contextual vacuum but are strongly linked to the increasing appeal of sustainable finance, ESG investing, and the strong green growth they are supporting. Therefore, this paper will first illustrate recent green growth trends in the areas of sustainable finance and ESG investing before exploring how greenwashing and subject matter expertise-related competence greenwashing have been increasing alongside those trends.

Keywords: Greenwashing, Carbonwashing, Competence Greenwashing, Sustainable Finance, ESG, Sustainability Reporting, Sustainability

JEL Classification: C80, G3, G24, Q01, Q2, Q3, Q4, Q50, Q54, Q55, Q56

Suggested Citation

Schumacher, Kim, Environmental, Social, and Governance (ESG) Factors and Green Productivity: The Impacts of Greenwashing and Competence Greenwashing on Sustainable Finance and ESG Investing (December 15, 2022). APO Productivity Insights Vol. 2-11 (2022), Available at SSRN: https://ssrn.com/abstract=4303609 or http://dx.doi.org/10.2139/ssrn.4303609

Kim Schumacher (Contact Author)

Kyushu University - Institute for Asian and Oceanian Studies ( email )

Motooka 744, Nishi-ku
Fukuoka, Fukuoka-ken 819-0395
Japan
092-802-2603 (Phone)
092-802-2608 (Fax)

HOME PAGE: http://q-aos.kyushu-u.ac.jp/en/staff/3129/

Tokyo Institute of Technology - School of Environment and Society ( email )

2-12-1 Ookayama, Meguro-ku
Tokyo, Tokyo-to 152-8550
Japan

HOME PAGE: http://bit.ly/2Dj8Y8S

University of Oxford - School of Geography and the Environment ( email )

Oxford University Centre for the Environment
South Parks Road
Oxford, OX1 3QY
United Kingdom

HOME PAGE: http://www.geog.ox.ac.uk/staff/kschumacher.html

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