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Is All That Glitters That “Green”? An Empirical Investigation of the Magnitude of Greenwashing in Banking and Its Determinants

In: New Challenges for the Banking Industry

Author

Listed:
  • Gimede Gigante

    (Bocconi University)

  • Priscilla Greggio

    (Bocconi University)

  • Andrea Cerri

    (Bocconi University)

Abstract

This chapter examines banks’ “green finance” and greenwashing claims. Firstly, a new methodology is introduced to quantify the magnitude of greenwashing for a cross-country dataset in the period 2016–2020. Then, regression analysis is performed to test whether firms, country and temporal-level factors influence banks’ greenwashing practices. The results suggest that big, more profitable banks located in advanced economies are more likely to engage in greenwashing, and that this behavior has reduced over the selected time period. Considering that the adherence to voluntary disclosing initiatives does not significantly mitigate greenwashing, the research confirms the urgent need for stringent surveillance by a global governing body to check the reliability of banks’ sustainable data disclosed. It also points out that banks’ sustainable finance commitments and claims of “net-zero by 2050” cannot be taken seriously if they are considered as a license to avoid taking immediate action on their fossil fuel investments.

Suggested Citation

  • Gimede Gigante & Priscilla Greggio & Andrea Cerri, 2023. "Is All That Glitters That “Green”? An Empirical Investigation of the Magnitude of Greenwashing in Banking and Its Determinants," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Santiago Carbó-Valverde & Pedro J. Cuadros-Solas (ed.), New Challenges for the Banking Industry, chapter 0, pages 145-183, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-031-32931-9_7
    DOI: 10.1007/978-3-031-32931-9_7
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