Discussion paper

DP18831 A Greenwashing Index

We construct a news-implied index of greenwashing. Our index reveals that greenwashing has become particularly prominent in the past five years. Its increase was driven by skepticism towards the financial sector, specifically ESG funds, ESG ratings and green bonds. We show that greenwashing impacts investors' behavior. Unexpected increases in the greenwashing index are followed by decreases of flows into funds advertised as sustainable, both for retail and institutional investors. They furthermore bias the estimation of stocks' beta on climate risk, distorting the estimated climate risk premium. When accounting for greenwashing, the climate risk premium becomes small and statistically insignificant.


Gourier, E and H Mathurin (2024), ‘DP18831 A Greenwashing Index‘, CEPR Discussion Paper No. 18831. CEPR Press, Paris & London. https://cepr.org/publications/dp18831