Corporate Social Responsibility (CSR), also known as Corporate Citizenship, is a self-regulated business model focused on "doing well by doing good" (Broadstock et al., 2018).
CSR aims to promote social good beyond legal requirements. Research shows that CSR generates goodwill and positive moral capital, safeguarding the market value of publicly traded companies (Godfrey et al., Lins et al.; Shiu & Yang, 2017; Zhang et al., 2019).
This moral capital stabilizes stock volatility during periodic earning crises on Wall Street (Minutolo et al., 2018). Studies also show that consumers are willing to pay a premium for goods and services contributing to social benefits. CSR has evolved into a megatrend, driven by voluntary adoption and regulatory pressure over the past few decades (Brockett & Rezaee, 2012; Jun et al., 2017).
Various definitions of CSR, focusing on moral and ethical dimensions, have appeared. Carroll (1979) defined CSR as a set of obligations expected by the public. The European Commission (2011) expanded CSR to encompass Environmental, Social, and Governance (ESG) criteria to address consumer concerns beyond legal obligations.
There's little dispute that CSR enhances companies' public feeling. Moreover, "doing well by doing good" through CSR strategies has positive social and environmental impacts.
The history of CSR traces back decades, with advocates like Adolf A. Berle arguing that corporations should help the entire economy. Despite opposing views from economists like Milton Friedman and Merrick Dodd, who argue for a shareholder-centric approach, CSR fosters social goodwill and positive public perception.
Despite the widespread popularity of CSR, some corporations engage in the practice of "greenwashing." Imogen, Rose, and Smith (2020) defined greenwashing as the deceptive practice of companies making false or misleading claims about their ESG practices.
Research suggests that greenwashing may arise from companies struggling to develop and implement effective ESG strategies (Searcy et al., 2016; Lokuwaduge & Heenetiagala, 2016). Failed public relations may create a gap between corporate identity and consumer beliefs, motivating greenwashing.
Greenwashing aims to improve the corporate image without a genuine commitment to ESR goals. Some executives view CSR and ESG goals not as expenses but as ways to differentiate their firms from those not engaging in CSR, potentially motivating greenwashing.
Akepa, a Barcelona-based firm promoting ESG goals, found 13 firms engaging in greenwashing in 2023. According to Akepa, greenwashing involves making brands appear more sustainable than they are, exploiting eco-conscious consumers.
Among the larger firms accused, Delta Airlines allegedly made false carbon neutrality claims, Keurig false recycling claims, and Windex misleading plastic packaging claims. Akepa also recalled a 2019 incident in which McDonald's introduced non-recyclable paper straws as an example of corporate giants pretending to address issues without real action.
While Akepa's perspective reflects its business interests, these examples show common instances of greenwashing to mislead the public.
While greenwashing may persist as companies seek to capitalize on increasing public awareness of CSR and stakeholders become more skeptical of unethical actions (Dean et al., 1998; Li et al., 2021), most firms seem committed to CSR and ESG.
The United Nations Global Compact Accenture (2019) found that 99 percent of CEOs in companies with at least $1 billion in annual revenues considered sustainability "important to very important" for business success.
Despite the potential motivation for greenwashing, the United Nations figure suggests that only one percent of firms are not committed to CSR and ESG. The question arises: Will greenwashing persist among smaller firms and the remaining one percent?
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