Climate pledges and greenwashing: Information provision does not work

Vittoria Battocletti, Alfredo Desiato, Alessandro Romano, Chiara Sotis and Tobias Tröger

No 447, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: Many firms are making net-zero and carbon neutral pledges. In principle, these pledges should help consumers identify sustainable options, but often they do not correspond to meaningful actions. In response, both in the U.S. and in Europe, courts and policymakers are requiring firms to disclose more information regarding their climate pledges. This strategy assumes that consumers pay attention to the information provided, are able to understand it, and adjust their behavior accordingly. We test this assumption in two studies with representative samples of U.S. residents (N = 300, N = 1500) and a large-scale eyetracking study (N = 500). First, we show that while people are not aware of the meaning of the most common climate pledges, they are willing to pay a considerable premium for these claims, confirming that an unregulated market may lead to greenwashing. Second, we observe that information provision does not affect respondents when making consequential choices on how much to pay for gift cards of firms that have made a climate pledge. Third, we find that in a realistic setting where respondents receive multiple pieces of information about various products, information regarding climate pledges attracts significant attention. However, it does not improve understanding of climate pledges and actually increases recipients' confusion. Our results add to the growing evidence that individual frame interventions are not a viable shortcut to address systemic issues like global warming.

JEL-codes: D82 D83 K1 K2 K32 M38 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:316444

DOI: 10.2139/ssrn.5233205

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