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Does Societal Trust Reduce Greenwashing? International Evidence

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  • Md Ismail Haidar

Abstract

I investigate the influence of societal trust on greenwashing. Utilizing the ESG controversies score as a proxy for greenwashing, this research finds that firms in high‐trust societies engage in fewer greenwashing activities. The effect is less pronounced for firms in countries with strong formal institutions, consistent with the notion that societal trust works as a substitute for country‐level formal institution. However, the effect is more pronounced for highly visible firms. This study highlights three potential mechanisms through which societal trust reduces greenwashing practices: enhanced firm reputation, improved accounting transparency, and stronger stakeholder engagement. Overall, these findings underscore the significant role of societal trust in mitigating corporate greenwashing and fostering sustainable business practices.

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  • Md Ismail Haidar, 2025. "Does Societal Trust Reduce Greenwashing? International Evidence," Business Strategy and the Environment, Wiley Blackwell, vol. 34(3), pages 3400-3424, March.
    • Handle: RePEc:bla:bstrat:v:34:y:2025:i:3:p:3400-3424
    DOI: 10.1002/bse.4126
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    1. Haidar, Md Ismail & Kroll, Mark & Nguyen, Nam H., 2025. "Does brand capital influence corporate environmental policies? Evidence from toxic release inventory data," Journal of Corporate Finance, Elsevier, vol. 95(C).
    2. Hanwen Chen & Siyi Liu & Di Zhang & Lei Zhang, 2025. "Corporate ESG Washing and ESG Rating Divergence: Evidence From China," Business Strategy and the Environment, Wiley Blackwell, vol. 34(7), pages 8390-8428, November.

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