Corporate Governance-Based Prevention Strategies Against Greenwashing: A Conceptual Framework

Greenwashing (GW) is a multidimensional phenomenon based on the discrepancy between corporate communications and performance on environmental issues. It results from the trade-off between the increasing importance of environmental compliance and companies’ substantial efforts towards this objective. Among the several definitions of this phenomenon, the ones that enlighten its misleading intent shed light on the possible linkage between GW and the willingness to hide potential scandals or illegal behaviours. Grounding on the institutionalized agency theory and on the definition of a multifaceted vision of GW, this chapter illustrates a set of main internal, external, and hybrid GW dimensions such as the levels of GW, the role assumed by the industry, and the institutional context, the impact on stakeholders’ perceptions and companies’ value, the locus and the sources of GW and on its level of objectivity. Then, it shows how some prevention strategies based on corporate governance can contrast GW and environmental crimes. Specifically, internal prevention strategies are based on voluntary disclosure and stakeholder involvement, whereas external prevention strategies are based on mandatory standards and disclosure assurance. Therefore, this chapter provides a conceptual framework useful for understanding GW strategies as a possible way of hiding environmental crimes and legitimating the companies’ behaviours as well as GW prevention strategies based on corporate governance.