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Greenwashing or Genuine Impact? Investigating the Link Between ESG Ratings and Financial Performance in the Automobile Industry

In: Proceedings of the 2025 International Conference on Hybrid Commerce, Human Capital, and Economic Dynamics (ICHCH 2025)

Author

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  • Tianjiao Jin

    (Northeastern University, D’Amore-McKim School of Business)

Abstract

As environmental, social, and governance (ESG) investing gains global momentum, ESG ratings have become a key tool for evaluating corporate sustainability. However, growing concerns over “greenwashing”, where firms strategically enhance disclosures to achieve higher ESG scores without substantive improvements, raise doubts about the credibility and economic relevance of these ratings. This study focuses on the automotive industry, known for its high carbon emissions and intense pressure to transition toward sustainability. It systematically examines the relationship between ESG ratings and corporate financial performance, with a particular emphasis on how greenwashing behavior may distort this relationship. By analyzing the interference mechanisms through which symbolic ESG actions affect rating outcomes and market perception, the paper aims to reveal the extent to which ESG ratings reflect actual sustainability efforts versus strategic signaling. The findings contribute to a deeper understanding of ESG rating reliability and offer insights for investors, regulators, and stakeholders seeking to align financial performance with genuine environmental and social progress.

Suggested Citation

  • Tianjiao Jin, 2026. "Greenwashing or Genuine Impact? Investigating the Link Between ESG Ratings and Financial Performance in the Automobile Industry," Advances in Economics, Business and Management Research, in: Ata Jahangir Moshayedi (ed.), Proceedings of the 2025 International Conference on Hybrid Commerce, Human Capital, and Economic Dynamics (ICHCH 2025), pages 479-488, Springer.
    • Handle: RePEc:spr:advbcp:978-2-38476-585-0_54
    DOI: 10.2991/978-2-38476-585-0_54
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