Presentations at an Academic or Professional conference
Year
2024
Abstract
The mounting pressure from activists, investors and government agencies to tackle climate change has led some firms to provide misleading information about the environmental soundness of their practices. This phenomenon is often referred to as ‘greenwashing’. Does greenwashing have an impact on financial markets? We use artificial intelligence to show that it does. First, we find that the media has been reporting increasingly about greenwashing since 2015. This increase is driven by concerns about green assets, i.e., assets developed by the financial sector to incentivize and help companies to become greener. When the volume of media reports increases, investments into green funds slow down. Firms that are really green therefore suffer from less investments as well. Second, greenwashing induces uncertainty on how exposed firms really are to climate risk. The measurement of this exposure is crucial to guide green investors in their asset allocation. The second part of our project seeks to achieve a more granular understanding of the effects of greenwashing at the firm level. The main challenge to detecting greenwashing, however, lies in the ability to verify firms’ claims. The many communication channels that can be used for greenwashing make manual searches extremely resource-intensive. We develop an AI-based detection method which compares the communications of firms, through press releases and their websites, and matches them. Our method raises a red flag when the contents of these communications are related to sustainability, and do not match. The next step will be to analyze whether firms that are greenwashing more, according to our algorithm, are the firms that are the most impacted.
GOURIER, E. (2024). Greenwashing: How does it impact financial markets? Dans: Science & Society 2024. Cergy.