Board Characteristics and Greenwashing: An Integrated Financial Investigation Using Entropy Weight and TOPSIS Multicriteria Decision-Making

In 2025, mandatory climate reporting and heightened regulatory scrutiny of misleading environmental claims will persist in prioritizing the danger of greenwashing within the financial industry. Financial governance experts are genuinely concerned about the possible consequences of greenwashing on their firms. Therefore, those engaged in organizational governance have a crucial obligation to prevent greenwashing. The major purpose of this inquiry is to examine the influence of board features on greenwashing. We propose a new set of criteria to examine the correlation between greenwashing and the board of directors. The data for 359 publicly listed European financial institutions were acquired from the Refinitiv Eikon database for Fiscal Year 2024. The entropy weight and Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) approaches for multicriteria decision-making were used to examine the data. These assist us in determining the relative importance of each chosen criterion about the board’s attributes and their impact on greenwashing. The study indicates that governance is the primary factor affecting greenwashing. Moreover, the findings indicate that the influence of directors is a significant factor in the increased prevalence of greenwashing among financial organizations. This indicates that the relationship between board size and greenwashing is debatable. The problem of greenwashing has primarily elevated the standards for evaluating board effectiveness and conflicts of interest, which are listed third on the list. The study results may be used to develop a new research agenda on the examined topic.