Laws meant to stop companies from lying about being 'green' have actually caused a huge surge in greenwashing.
March 25, 2026
Original Paper
Mandatory Disclosure and Passive Greenwashing: Global Evidence from Natural Language Processing Based Indices
SSRN · 6461688
The Takeaway
We usually assume that forcing companies to report their environmental impact leads to better behavior. However, data from over 2,600 companies shows that these laws caused firms to increase their 'commitments' while actually slowing down their real-world improvements.
From the abstract
Unveiling the relationship between regulatory policies and corporate greenwashing is crucial for promoting green transformation. Based on Carbon Disclosure Project (CDP) questionnaire responses from 2,654 companies in 32 countries from 2012 to 2022, we conduct text analysis using advanced machine learning methods and developed two new greenwashing indices to measure the gap between corporate green commitments and actual actions. These indices offer advantages in terms of continuity, consistency,