Analysis of the Impact of Greenwashing on Stock Financial Performances of Companies
Research Article
Open Access
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Analysis of the Impact of Greenwashing on Stock Financial Performances of Companies

Yucheng You 1*
1 Shanghai Southwest Weiyu High School
*Corresponding author: rachel356927@gmail.com
Published on 30 July 2025
Volume Cover
AEMPS Vol.203
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-275-1
ISBN (Online): 978-1-80590-276-8
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Abstract

As organizations face pressure from consumers to address ESG issues, sustainable marketing campaigns have become prevalent. Such campaigns can link a brand's public image to environmental sustainability, thereby helping to boost sales. Many companies will be attracted to the huge benefits of an ESG product like green bond. But there are some companies that just love the mere boo-boo of ESG. They want to label their company as ESG as a way to attract users with advertisements. As a matter of fact, they will not do any actions related to green bond. This behaviour is known as “greenwashing”. The aim of this paper is to explore the impact of greenwashing on companies, especially when the public notices. For research, this paper uses an event study to help quantify unusual changes in stock prices when a particular event occurs, such as when a company is exposed for greenwashing practices. The object of study is the bond price of S&P 500 and Volkswagen from June 8th, 2014 to April 9th 2015. Data sources are from Investing.com, which widely used by investors, analysts, researchers and financial practitioners worldwide. Finally, this study finds that the abnormal returns (AR) show significant fluctuations during the event window, especially around the event date, August 21, 2015, this demonstrates the adverse effect that greenwashing has on a company.

Keywords:

greenwashing, environmental sustainability, impact

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You,Y. (2025). Analysis of the Impact of Greenwashing on Stock Financial Performances of Companies. Advances in Economics, Management and Political Sciences,203,57-63.

References

[1]. Zhou, D., Kythreotis, A. (2024) Why issue green bonds? Examining their dual impact on environmental protection and economic benefits. Humanit Soc Sci Commun 11, 1761.

[2]. Ren X., Zeng G., Sun X. (2023) The peer effect of digital transformation and corporate environmental performance: Empirical evidence from listed companies in China. Economic Model. 128: 106515.

[3]. Simionescu M., Gavurová B. (2023) Pollution, income inequality and green finance in the new EU member states. Humanities and Social Sciences Communications, 10(1).

[4]. Zhou X.G., Tang X.M., Zhang R. (2020) Impact of green finance on economic development and environmental quality: a study based on provincial panel data from China. Environ. Sci. Pollut. Res. 27(16): 19915–19932.

[5]. Walker K., Wan F. (2012) The harm of symbolic actions and green-washing: corporate actions and communications on environmental performance and their financial implications. J. Bus. Ethics 109(2): 227–242.

[6]. Nyilasy G., Gangadharbatla H., Paladino A. (2014) Perceived greenwashing: the interactive effects of green advertising and corporate environmental performance on consumer reactions. J. Bus. Ethics 125(4): 693–707.

[7]. Adam Hayes. (2024) Greenwashing: Definition, How It Works, Examples, and Statistics https: //www.investopedia.com/terms/g/greenwashing.asp

[8]. Bernini F., La Rosa F. (2024) Research in the greenwashing field: concepts, theories, and potential impacts on economic and social value. J Manag Gov, (28): 405–444.

[9]. Feghali, K., Najem, R., Metcalfe, B. D. (2025). Greenwashing in the era of sustainability: A systematic literature review. Corporate Governance and Sustainability Review, 9(1): 18–31.

[10]. Lyon, T. P., Montgomery, A. W. (2015). The means and end of greenwash. Organization & Environment, 28(2): 223–249.

[11]. Xianwang  Shi,   Jianteng  Ma,   Anxuan  Jiang,   Shuang  Wei,   Leilei  Yue. (2023) Green bonds: green investments or greenwashing? https: //www.sciencedirect.com/science/article/abs/pii/S1057521923003666

[12]. Free, C., Jones, S., Tremblay, M.S. (2024). Greenwashing and sustainability assurance: A review and call for future research. Journal of Accounting Literature.

[13]. Nemes, N., et al. (2022). An Integrated Framework to Assess Greenwashing. Sustainability, 14(8): 4431.

[14]. de Silva Lokuwaduge, C. S., De Silva, K. M. (2022). ESG Risk Disclosure and the Risk of Green Washing. Australasian Accounting, Business and Finance Journal, 16(1): 146–159.

[15]. Verma, M., Bharti, U. (2023). Combating Greenwashing Tactics and Embracing the Economic Success of Sustainability. VEETHIKA: An International Interdisciplinary Research Journal, 9(3): 9–16.

[16]. Li, Z., et al. (2023). How Does Environmental Regulation Affect Corporate Environmental, Social, and Governance (ESG) Greenwashing? Evidence from China. Sustainability, 16(23), 10608.

[17]. Sun, Y., Zhang, Y. (2019). Greenwashing Risks in Environmental Quality Competition: Detection and Deterrence. Games, 10(2), 14.

[18]. Arouri, M., El Ghoul, S., Gomes, M. (2021). Greenwashing and Product Market Competition. Finance Research Letters, 42, 101927.

[19]. Kim, E. H., Lyon, T. P. (2015). Greenwash vs. Brownwash: Exaggeration and Undue Modesty in Corporate Sustainability Disclosure. Organization Science, 26(3): 705–723.

[20]. Keilmann, J., Koch, T. (2023). When Environmental Claims are Empty Promises: How Greenwashing Affects Corporate Reputation and Credibility. Environmental Communication, 18(3): 266–284.

[21]. Gatti, L., Seele, P., Rademacher, L. (2023). A systematic literature review on greenwashing and its relationship to stakeholders: State of art and future research agenda. Management Review Quarterly, 74(1), 1397–1421.

[22]. Robertson, J. L., Montgomery, A. W., Ozbilir, T. (2023). Employees' response to corporate greenwashing. Business Strategy and the Environment, 32(7): 4015–4027.

[23]. Sajid, M., Zakkariya, K. A., Suki, N. M., Islam, J. U. (2024). When going green goes wrong: The effects of greenwashing on brand avoidance and negative word-of-mouth. Journal of Retailing and Consumer Services, 78, 103773.

[24]. Chen, Z., Qian, C. (2023). Green Bond Pricing and Greenwashing under Asymmetric Information. SSRN Working Paper.

[25]. University virginia | Darden School of Business. The Past, Present and Future of Stakeholder Theory. https: //www.darden.virginia.edu/stakeholder-theory

References

[1]. Zhou, D., Kythreotis, A. (2024) Why issue green bonds? Examining their dual impact on environmental protection and economic benefits. Humanit Soc Sci Commun 11, 1761.

[2]. Ren X., Zeng G., Sun X. (2023) The peer effect of digital transformation and corporate environmental performance: Empirical evidence from listed companies in China. Economic Model. 128: 106515.

[3]. Simionescu M., Gavurová B. (2023) Pollution, income inequality and green finance in the new EU member states. Humanities and Social Sciences Communications, 10(1).

[4]. Zhou X.G., Tang X.M., Zhang R. (2020) Impact of green finance on economic development and environmental quality: a study based on provincial panel data from China. Environ. Sci. Pollut. Res. 27(16): 19915–19932.

[5]. Walker K., Wan F. (2012) The harm of symbolic actions and green-washing: corporate actions and communications on environmental performance and their financial implications. J. Bus. Ethics 109(2): 227–242.

[6]. Nyilasy G., Gangadharbatla H., Paladino A. (2014) Perceived greenwashing: the interactive effects of green advertising and corporate environmental performance on consumer reactions. J. Bus. Ethics 125(4): 693–707.

[7]. Adam Hayes. (2024) Greenwashing: Definition, How It Works, Examples, and Statistics https: //www.investopedia.com/terms/g/greenwashing.asp

[8]. Bernini F., La Rosa F. (2024) Research in the greenwashing field: concepts, theories, and potential impacts on economic and social value. J Manag Gov, (28): 405–444.

[9]. Feghali, K., Najem, R., Metcalfe, B. D. (2025). Greenwashing in the era of sustainability: A systematic literature review. Corporate Governance and Sustainability Review, 9(1): 18–31.

[10]. Lyon, T. P., Montgomery, A. W. (2015). The means and end of greenwash. Organization & Environment, 28(2): 223–249.

[11]. Xianwang  Shi,   Jianteng  Ma,   Anxuan  Jiang,   Shuang  Wei,   Leilei  Yue. (2023) Green bonds: green investments or greenwashing? https: //www.sciencedirect.com/science/article/abs/pii/S1057521923003666

[12]. Free, C., Jones, S., Tremblay, M.S. (2024). Greenwashing and sustainability assurance: A review and call for future research. Journal of Accounting Literature.

[13]. Nemes, N., et al. (2022). An Integrated Framework to Assess Greenwashing. Sustainability, 14(8): 4431.

[14]. de Silva Lokuwaduge, C. S., De Silva, K. M. (2022). ESG Risk Disclosure and the Risk of Green Washing. Australasian Accounting, Business and Finance Journal, 16(1): 146–159.

[15]. Verma, M., Bharti, U. (2023). Combating Greenwashing Tactics and Embracing the Economic Success of Sustainability. VEETHIKA: An International Interdisciplinary Research Journal, 9(3): 9–16.

[16]. Li, Z., et al. (2023). How Does Environmental Regulation Affect Corporate Environmental, Social, and Governance (ESG) Greenwashing? Evidence from China. Sustainability, 16(23), 10608.

[17]. Sun, Y., Zhang, Y. (2019). Greenwashing Risks in Environmental Quality Competition: Detection and Deterrence. Games, 10(2), 14.

[18]. Arouri, M., El Ghoul, S., Gomes, M. (2021). Greenwashing and Product Market Competition. Finance Research Letters, 42, 101927.

[19]. Kim, E. H., Lyon, T. P. (2015). Greenwash vs. Brownwash: Exaggeration and Undue Modesty in Corporate Sustainability Disclosure. Organization Science, 26(3): 705–723.

[20]. Keilmann, J., Koch, T. (2023). When Environmental Claims are Empty Promises: How Greenwashing Affects Corporate Reputation and Credibility. Environmental Communication, 18(3): 266–284.

[21]. Gatti, L., Seele, P., Rademacher, L. (2023). A systematic literature review on greenwashing and its relationship to stakeholders: State of art and future research agenda. Management Review Quarterly, 74(1), 1397–1421.

[22]. Robertson, J. L., Montgomery, A. W., Ozbilir, T. (2023). Employees' response to corporate greenwashing. Business Strategy and the Environment, 32(7): 4015–4027.

[23]. Sajid, M., Zakkariya, K. A., Suki, N. M., Islam, J. U. (2024). When going green goes wrong: The effects of greenwashing on brand avoidance and negative word-of-mouth. Journal of Retailing and Consumer Services, 78, 103773.

[24]. Chen, Z., Qian, C. (2023). Green Bond Pricing and Greenwashing under Asymmetric Information. SSRN Working Paper.

[25]. University virginia | Darden School of Business. The Past, Present and Future of Stakeholder Theory. https: //www.darden.virginia.edu/stakeholder-theory

Cite this article

You,Y. (2025). Analysis of the Impact of Greenwashing on Stock Financial Performances of Companies. Advances in Economics, Management and Political Sciences,203,57-63.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

About volume

Volume title: Proceedings of ICEMGD 2025 Symposium: Resilient Business Strategies in Global Markets

ISBN: 978-1-80590-275-1(Print) / 978-1-80590-276-8(Online)
Editor: Florian Marcel Nuţă Nuţă, Li Chai
Conference website: https://2025.icemgd.org/CAU.html
Conference date: 20 September 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.203
ISSN: 2754-1169(Print) / 2754-1177(Online)

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