Abstract Greenwashing poses a significant challenge to the fight against climate change by undermining trust in corporate sustainability claims. This study introduced the greenwashing tendency score (GTS), an automatable method designed to detect greenwashing tendencies in corporate sustainability reports. By leveraging textual sentiment and alignment analysis techniques in conjunction with environmental, social, and governance ratings, the GTS quantifies discrepancies between communicated and actual sustainability performance. We applied our methodology to 36 German stock index companies during the years from 2020 to 2022. Our key findings reveal substantial variations in greenwashing tendencies among these companies, emphasizing the need for more transparent and reliable sustainability reporting. The GTS emerged as a scalable, reproducible, and objective tool that can aid, for example, investors, regulators, and Non-government organizations in identifying greenwashing practices. This research contributed to the sustainable finance literature by introducing a neutral and open measure to assess firms’ greenwashing tendency, summarizing implications for policymaking and regulatory authorities and discussing its potential for long-term accountability and integrity in corporate sustainability communications.
Motz et al. (Thu,) studied this question.