Greenwashing in green bonds: a systematic literature review

Purpose This study aims to explain how greenwashing emerges, persists and affects credibility in green bond markets. Rather than treating greenwashing as isolated misleading communication, it examines the interaction between financial incentives, governance structures, information asymmetries, institutional arrangements and market consequences. The study also identifies the main manifestations, drivers, consequences and mitigation mechanisms associated with greenwashing in sustainable debt instruments. Design/methodology/approach The study conducts a systematic literature review following the PRISMA protocol. Scopus and Web of Science were searched for peer-reviewed studies addressing greenwashing in sustainable debt markets, resulting in a final sample of 46 articles. The selected studies were analyzed through inductive thematic synthesis, involving iterative data reduction, thematic organization, relational interpretation and refinement of conclusions. Categories were developed from recurring patterns concerning governance dynamics, operational mechanisms, manifestations, consequences and mitigation strategies. Findings The findings show that greenwashing in green bond markets is driven by reputational incentives, lower financing costs, weak regulatory oversight, investor attraction and the relabeling of preexisting projects. It manifests through selective disclosure, weak additionality, symbolic certification, regulatory arbitrage, limited transparency and redirection of proceeds. These practices can erode investor trust, damage issuer reputation, widen credit spreads, increase financing costs and restrict market scalability. Institutional moderators may either mitigate or reproduce these dynamics depending on their effectiveness. Research limitations/implications The study is limited by the geographical concentration of the literature, particularly its strong focus on the Chinese green bond market, and by its reliance on published academic research, which may underrepresent enforcement actions and emerging regulatory developments. Future studies should conduct comparative cross-country analyses and empirically test the proposed framework through case studies, interviews, process tracing and document analysis, particularly in emerging markets and the Global South. Practical implications The findings suggest that issuers should incorporate environmental integrity before issuance through clear eligibility criteria, measurable targets, additionality and traceability of proceeds. Investors, auditors and external reviewers should assess discrepancies between ex ante commitments and post-issuance outcomes. Policymakers should strengthen harmonized taxonomies, standardized reporting, post-issuance verification, reviewer independence and enforcement mechanisms. However, regulatory requirements should remain proportionate to avoid restricting access to climate finance for smaller issuers and emerging markets. Social implications Greenwashing in green bond markets may deepen inequalities between developed and developing economies by increasing verification and certification costs, restricting access to climate finance and concentrating capital among larger issuers. In emerging markets, exposed greenwashing cases may also increase investor distrust and widen climate finance gaps. Strengthening market credibility is therefore important not only for investor protection but also for ensuring broader access to sustainable finance and supporting progress toward the Sustainable Development Goals. Originality/value This study advances the green bond literature by reframing greenwashing as a systemic and dynamic field-level process rather than an isolated organizational practice. It develops an integrative framework linking motivational drivers, operational mechanisms, empirical manifestations, market consequences, institutional moderators and mitigation responses. By connecting institutional fragmentation, governance gaps and issuer behavior to financial and societal consequences, the study provides a broader explanation of how greenwashing is produced, reproduced and potentially constrained within green bond markets.