The Drivers of Greenwashing

Forthcoming in California Management Review

More and more firms are engaging
in greenwashing, misleading consumers about firm environmental performance or
the environmental benefits of a product or service. The skyrocketing incidence
of greenwashing can have profound negative effects on consumer confidence in
green products, eroding the market that these firms sought to access in the
first place. Mitigating greenwashing is particularly challenging in a context
of limited and uncertain regulation. While the drivers and effects of firm
environmental performance are well understood, there are few tools available to
managers or policymakers seeking to analyze the drivers of greenwashing or to
mitigate greenwashing. In this paper, we develop a framework that examines the
drivers of greenwashing and use these drivers to develop recommendations for
how to decrease firm greenwashing. We draw from existing work in relevant
fields – management, psychology, sociology and economics – which have studied
and established factors that can influence individual and firm behavior under
various circumstances. Analyzing these greenwashing drivers in turn, we provide
recommendations for managers, policymakers, and other institutional entities
such as NGOs to decrease the incidence and severity of greenwashing in practice.