Greenwashing and CEO Integrity

CEO integrity influences greenwashing—voluntary environmental disclosures that do not reflect actual performance. While a strong green reputation benefits firms, misleading disclosures can harm a CEO’s credibility. Low-integrity CEOs are more likely to engage in greenwashing, while high-integrity CEOs avoid reputational risks. Investors and ESG analysts consider CEO integrity when assessing disclosures, impacting stock returns and ESG ratings. CEO integrity may help explain ESG rating divergence.