Objective vs. Perceived Corporate Greenness: Do Individuals Understand Corporate Sustainability Information?

Kornelia Fabisik and Sebastian Rink

No 21803, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We investigate how individuals interpret corporate sustainability disclosures in a pre-registered survey experiment. We provide novel evidence that participants can meaningfully distinguish greener from browner firms, yet their assessments exhibit a central tendency bias. Interestingly, this bias is asymmetric: respondents overestimate the greenness of browner firms while underestimating the greenness of greener firms more strongly. The same pattern persists among finance professionals and sustainability experts, suggesting that expertise alone does not eliminate interpretation errors. Consequently, firms’ incentives to invest in emissions reductions may be attenuated. We further identify disclosure design features that enhance individuals’ ability to differentiate firms’ emissions performance.

Keywords: Information; processing (search for similar items in EconPapers)
JEL-codes: Q50 Q53 Q54 (search for similar items in EconPapers)
Date: 2026-07
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