Same Firms, Different Verdicts: ESG Rating Choice and the Measurement of Greenwashing
Why the same company looks greener or dirtier depending on who grades it
European firms with prominent stock market listings talk much bigger about their environmental efforts than their actual emissions reductions show — a gap nearly three times wider than smaller companies. But the greenwashing disappears entirely when researchers use a different environmental rating system to measure the same companies, revealing that much of what looks like corporate deception is actually an artifact of which rating agency is doing the measuring.
Investors, regulators, and asset managers rely on environmental ratings to direct trillions of dollars toward genuinely sustainable companies. If the same firm appears virtuous under one rating system and deceptive under another, it means current tools for detecting greenwashing are unreliable — making it harder to distinguish real environmental progress from marketing. This suggests regulators need standardized measurement approaches before environmental ratings can effectively steer capital toward actual sustainability.