Tuesday 26 March – from 1:15pm to 2:15pm

Can Investors Curb Greenwashing?

David Zerbib, Assistant Professor of Sustainable Finance at CREST, ENSAE, Institut Polytechnique de Paris

Abstract:

We show how investors who have pro-environmental preferences and penalize revelations of past environmental controversies impact corporate greenwashing practices. Through a dynamic equilibrium model with information asymmetry, we characterize firms’ optimal environmental communication, pollution abatement, and greenwashing policies, and we explain the forces driving them. Notably, we show that, despite the threat of penalty, companies continuously greenwash as long as the gap between their environmental score and their undisclosed fundamental environmental value is not too high. We provide empirical evidence supporting the equilibrium results of our model.

Registration, please contact robin@em-lyon.com

Room 235 – Ecully campus