The Impact of Greenwashing: Risks and Implications for Corporate Performance and Stakeholder Trust
- DOI
- 10.2991/978-2-38476-358-0_8How to use a DOI?
- Keywords
- Greenwashing; Firm Risk; Corporate Reputation; Stakeholder Trust; Sustainability Practices
- Abstract
This conceptual paper investigates the impact of greenwashing on firm risk, corporate reputation, and financial performance, particularly in industries with significant environmental implications. Using Legitimacy Theory, Stakeholder Theory, and Signalling Theory, it explores why firms engage in greenwashing and the risks associated with deceptive environmental practices. Greenwashing may offer short-term benefits, such as enhanced brand image or market share, but it also leads to long-term consequences, including legal liabilities, reputational damage, and financial instability. The paper emphasizes the importance of corporate transparency and genuine sustainability practices in mitigating these risks. By aligning corporate actions with stakeholder expectations and promoting accountability, firms can avoid the pitfalls of greenwashing and build lasting trust with consumers, investors, and regulators. This theoretical framework offers insights into how companies can foster ethical behaviour and sustainable practices for long-term success.
- Copyright
- © 2025 The Author(s)
- Open Access
- Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.
Cite this article
TY - CONF AU - Woon Leong Lin AU - Siong Choy Chong AU - Chuen Khee Pek AU - Jing Yi Yong AU - Kelvin Lee Yong Ming AU - Nelvin Leow XeChung PY - 2025 DA - 2025/01/31 TI - The Impact of Greenwashing: Risks and Implications for Corporate Performance and Stakeholder Trust BT - Proceedings of the International Conference on Environmental, Social, and Governance (ICESG 2024) PB - Atlantis Press SP - 77 EP - 94 SN - 2352-5398 UR - https://doi.org/10.2991/978-2-38476-358-0_8 DO - 10.2991/978-2-38476-358-0_8 ID - Lin2025 ER -