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Green Branding vs Greenwashing: New Study Reveals Rising Risks in Corporate Sustainability Claims
A 2026 study by Loso Judijanto of IPOSS Jakarta highlights a growing divide between genuine environmental branding and misleading “greenwashing” among corporations in developed economies. Published in the Multitech Journal of Science and Technology, the research shows that while companies increasingly promote sustainability commitments, many fail to match their claims with real environmental action—raising concerns for consumers, investors, and regulators worldwide.
The findings matter as sustainability communication becomes central to corporate strategy across Europe, the United States, and other advanced markets. With stricter environmental regulations and rising public awareness of climate change, companies face mounting pressure to demonstrate credible environmental performance. However, the study finds that misleading claims are still widespread, eroding trust and slowing progress toward global climate goals.
Why Sustainability Claims Matter Now
Corporate sustainability messaging has expanded rapidly in recent years, driven by demand from environmentally conscious consumers and investors focused on ESG (Environmental, Social, and Governance) criteria. Businesses now routinely promote eco-friendly products, carbon reduction targets, and “net-zero” ambitions.
This surge reflects a broader shift: companies are expected not only to generate profits but also to contribute meaningfully to environmental protection. In developed economies, sustainability communication has become a competitive tool for attracting customers, capital, and public trust.
Yet the same trend has enabled greenwashing—defined as communication that creates a false or exaggerated impression of environmental responsibility. According to the study, more than half of environmental claims examined in earlier EU assessments were vague or misleading, underscoring the scale of the problem.
How the Study Was Conducted
Judijanto used a qualitative literature review approach, analyzing peer-reviewed research published between 2020 and 2025. The study draws on major academic databases, including Scopus and Web of Science, and synthesizes insights from multiple disciplines such as marketing, finance, and environmental studies.
Rather than relying on numerical data alone, the research identifies patterns in how companies communicate sustainability, how regulators respond, and how stakeholders interpret environmental claims. The analysis is guided by key theories, including signaling theory, legitimacy theory, and stakeholder theory.
Key Findings: How Greenwashing Has Evolved
The study identifies a clear evolution in corporate greenwashing practices:
1. From simple claims to complex strategies
- Early greenwashing focused on product labels and advertising.
- Today, it includes ESG reports, investor communications, and long-term climate pledges.
2. Rise of “futurewashing”
- Companies increasingly promote future goals such as net-zero emissions.
- These promises are difficult to verify and may lack concrete implementation plans.
3. Selective disclosure is common
- Firms highlight positive environmental actions while hiding negative impacts.
- This creates a misleading overall impression of sustainability performance.
4. Sector-specific risks
- Energy companies often promote clean energy while continuing fossil fuel expansion.
- Financial institutions face scrutiny over ESG-labeled investment funds.
- Fashion brands are criticized for unclear supply chain sustainability claims.
5. Consumer skepticism is increasing
- Educated consumers are better at spotting misleading claims.
- Greenwashing reduces trust and leads to negative word-of-mouth.
Regulatory Pressure Is Growing—but Not Perfect
The study highlights significant regulatory developments, particularly in the European Union:
- The Corporate Sustainability Reporting Directive (CSRD) requires detailed, standardized ESG disclosures.
- The Empowering Consumers for the Green Transition Directive bans vague environmental claims and misleading labels.
In the United States, enforcement is less centralized but still intensifying. The Securities and Exchange Commission (SEC) has taken action against firms accused of misleading ESG disclosures, especially in financial markets.
However, the research notes a key challenge: regulation alone is not enough. Without strong enforcement and independent verification, companies may comply superficially while continuing misleading practices.
Real-World Impact: Who Is Affected?
The consequences of greenwashing extend far beyond corporate reputation:
- Consumers face confusion and may unknowingly support unsustainable products.
- Investors risk allocating capital based on inaccurate ESG data.
- Policymakers struggle to ensure fair and transparent markets.
- The environment suffers when misleading claims delay meaningful action.
The study emphasizes that trust is a critical factor. Once lost, it is difficult to rebuild—not only for individual brands but for sustainability initiatives as a whole.
What Works: The Value of Authentic Green Branding
Despite the risks, the research highlights that genuine sustainability communication offers clear benefits:
- Builds long-term consumer trust
- Strengthens brand loyalty
- Attracts responsible investment
- Enhances corporate reputation
Authentic green branding requires alignment between communication and action. Companies must provide transparent, verifiable, and consistent evidence of their environmental impact.
Expert Insight
Loso Judijanto of IPOSS Jakarta explains that misleading environmental claims undermine both market integrity and climate progress. He notes that companies often rely on symbolic actions rather than substantive change, creating a gap between what they say and what they do.
This gap, the study argues, is at the core of greenwashing—and the primary challenge for regulators and stakeholders seeking accountability.
Author Profile
Loso Judijanto is a researcher affiliated with IPOSS Jakarta, specializing in sustainability communication, corporate governance, and environmental strategy. His work focuses on ESG disclosure practices and the intersection of business strategy and environmental responsibility.
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