Detecting Greenwashing: An Analysis of ESG Disclosures and Regulatory oversight in India

Abstract

Purpose: This study examines how Environmental, Social, and Governance (ESG) disclosure practices and regulatory mechanisms influence perceived greenwashing and employee-related organizational outcomes in Indian organizations. It investigates the effects of ESG disclosure quality, ESG transparency, regulatory oversight, and ESG assurance on employee trust, employer attractiveness, and organizational reputation, considering the mediating role of perceived greenwashing and the moderating role of regulatory compliance.
Methodology: A quantitative research design was adopted using primary data collected from 181 employees of ESG-reporting organizations across India and secondary data from ESG reports, BRSR filings, annual reports, SEBI publications, and literature. Data were analyzed using SPSS and AMOS/SmartPLS through reliability, validity, correlation, regression, CFA, SEM, mediation, and moderation analyses.
Findings: ESG disclosure quality significantly reduced perceived greenwashing (β = −0.31, p < 0.001), while ESG transparency improved employee trust (β = 0.42, p < 0.001). Regulatory oversight negatively influenced perceived greenwashing (β = −0.18, p = 0.017), and ESG assurance positively affected organizational reputation (β = 0.36, p < 0.001). Employee trust enhanced employer attractiveness (β = 0.49, p < 0.001). Perceived greenwashing partially mediated the relationships (indirect effect = 0.13, p = 0.002; indirect effect = 0.11, p = 0.004), while regulatory compliance strengthened the negative relationship between ESG disclosure quality and perceived greenwashing (β = −0.17, p = 0.006).
Practical Implications and Originality: The findings highlight the importance of transparent ESG reporting, independent assurance, and regulatory compliance. The study extends Extended Signaling Theory by providing employee-centered evidence on ESG credibility in the Indian context.