Give a Hand or a Tournament? The Impact of Green Investment on Corporation ESG Commitment and Greenwashing
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Central University of Finance and Economics, Beijing 102206, China
Submission date: 2023-11-17
Final revision date: 2023-12-10
Acceptance date: 2023-12-16
Online publication date: 2024-04-25
Publication date: 2024-06-07
Corresponding author
Runtian Zhang   

Central University of Finance and Economics, Beijing 102206, China
Pol. J. Environ. Stud. 2024;33(4):4947-4957
The ESG framework has made a substantial contribution to environmental sustainability, with corporate ESG performance increasingly being recognized as a key factor in green investment decisions. However, intensifying competition among corporations to pledge low-carbon initiatives, aiming to attract limited green investments, has transformed ESG commitments into a competitive tournament. This suggests that a corporation’s public commitment to sustainability often supersedes its actual environmental actions in securing green investments. Despite the scrutiny of ESG commitments, a discrepancy risk persists between these commitments and their actual performance, such as greenwashing. This study develops a principal-agent comparative model to investigate the mechanisms and impacts of green investment decisions that are based on commitments and actual outcomes. The analysis reveals that the efficiency of commitmentbased investments hinges on the investor’s capacity for verification, with an essential threshold of accuracy for policy effectiveness. This verification process becomes significantly more important when companies derive greater profits from green investments. Unlike outcome-based investment strategies, commitment-based approaches may result in lower levels of carbon reduction by companies. However, they enable investors to curtail non-productive expenditures and enhance capital utilization efficiency. Consequently, the potential of commitment-based investments to enhance overall societal benefits depends on the accuracy of verification and its associated costs.
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