Researchers from Perbanas
Institute Jakarta published a study in 2026 analyzing the growing disparity
between corporate sustainability claims and actual environmental performance.
Authors Dessy Adelin, Jonnardi, Primadonna Ratna Mutumanikam, and Laela Lanjarsih
investigated how companies manipulate environmental disclosures to build
eco-friendly public images. The findings highlight how market pressures drive
greenwashing and greenfraud, undermining genuine global sustainability
initiatives and creating substantial long-term risks for investors, consumers,
and corporate reputation.
The Challenge of Corporate
Sustainability Communications
Corporate sustainability
initiatives have shifted from voluntary public relations efforts to core
metrics used by investors and regulators to assess corporate risk and
organizational success. Modern market trends favor companies that demonstrate
strong Environmental, Social, and Governance (ESG) performance. Consumers
increasingly favor eco-friendly products, and financial institutions channel
capital toward organizations with high ESG rankings.
However, this financial and
social incentive structure creates an environment where corporate
communications frequently outpace actual environmental achievements. While
companies actively publish sustainability reports and run green marketing
campaigns, many fail to make the required capital investments needed to reduce
emissions, manage waste, or transition to clean energy.
Study Methodology
The researchers conducted a
comprehensive qualitative literature study analyzing corporate sustainability
practices, ESG disclosures, and environmental reporting mechanisms. Secondary
data was collected from peer-reviewed scientific journals, academic books,
corporate disclosures, and regulatory frameworks published across major
databases, including Scopus, Web of Science, Google Scholar, ScienceDirect, and
SpringerLink.
The team applied content analysis
techniques to categorize corporate misconduct, identify structural reporting
gaps, and evaluate the underlying systemic factors that drive superficial
sustainability claims.
Key Findings: Greenwashing vs.
Greenfraud
The study delineates two distinct
categories of corporate environmental misrepresentation, each differing in
intent and severity:
- Greenwashing Dynamics: Greenwashing
represents a communication strategy where companies use selective or
ambiguous environmental statements to cultivate an eco-friendly image
without making substantive operational changes. Common tactics include
using vague terms like "eco-friendly" or "sustainable"
without verifiable metrics, as well as selective disclosure—highlighting
minor eco-friendly initiatives while concealing broader environmental
impacts.
- Greenfraud Mechanics: Greenfraud involves
deliberate manipulation, falsification, or concealment of environmental
data. Examples include altering carbon emission records, falsifying
environmental audit documents, or deliberately misreporting renewable
energy consumption.
- Primary Drivers: The widespread presence of
greenwashing and greenfraud is driven by market competition, the demand
for social legitimacy, inconsistent international reporting standards, and
a lack of mandatory independent third-party verification.
- Consequences of Misrepresentation:
Short-term reputational gains from exaggerated environmental claims often
lead to long-term valuation drops, severe legal litigation, regulatory
penalties, and a decline in consumer brand loyalty when discrepancies are
exposed.
Real-World Impact and Industry
Implications
The research emphasizes that
corporate misrepresentation distorts capital allocation in financial markets.
When investors rely on unverified ESG data, funds intended for sustainable
development are diverted to high-polluting companies operating under a green
facade.
To mitigate these risks, the
authors recommend implementing mandatory independent audits for all corporate
sustainability reports, establishing standardized global ESG reporting
frameworks, and strengthening corporate governance structures through independent
boards and internal ethics oversight.
"There needs to be more
transparency, stricter reporting standards, and effective oversight to make
sure that companies' sustainability claims reflect the actual environmental
conditions." — Dessy Adelin, Jonnardi, Primadonna Ratna Mutumanikam,
and Laela Lanjarsih, Perbanas Institute Jakarta
Author Profiles
- Dessy Adelin, M.A. is a researcher and
academic faculty member at Perbanas Institute Jakarta, specializing in
accounting, corporate governance, and corporate sustainability reporting.
- Jonnardi, Ph.D. is a researcher affiliated
with Perbanas Institute Jakarta, focusing his research on accounting
frameworks, financial auditing, and business ethics.
- Primadonna Ratna Mutumanikam, M.Sc. is a
lecturer and researcher at Perbanas Institute Jakarta with expertise in
management practices, corporate reporting, and sustainability.
- Laela Lanjarsih, M.Ak. is a researcher at
Perbanas Institute Jakarta specializing in corporate financial systems,
ESG metrics, and environmental performance evaluation.
Source
- Article Title: Greenwashing and Greenfraud
in Corporate Sustainability Practices: An Analysis of the Gap Between
Claims and Environmental Performance
- Journal Name: International Journal of
Applied Economics, Accounting and Management (IJAEAM)
- Publication Year: 2026
- DOI: https://doi.org/10.59890/ijaeam.v4i3.199
- Official URL: https://mrymultitechpublisher.my.id/index.php/ijaeam/index
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