Research on the Legal Regulation of Greenwashing in ESG Information Disclosure by Listed Companies

Abstract

As global attention to Environmental, Social and Corporate Governance (ESG) continues to rise, the transparency and authenticity of listed companies' ESG disclosure is becoming the focus of market attention. However, the phenomenon of "greenwashing" has become increasingly serious. The term "greenwashing" refers to companies misleading the market about their environmental and social responsibilities by exaggerating or falsely publicizing their sustainable development initiatives. If a listed company is exposed as "greenwashing", it not only damages its own reputation, but may also call into question the sustainability commitments of all companies. In China, while ESG disclosure is developing rapidly, the reputational risk of "greenwashing" behavior needs to be addressed urgently. In order to regulate the "greenwash" behavior of ESG disclosure of Chinese listed companies, the author puts forward the following suggestions by synthesizing the reasons for the "greenwash" phenomenon and the experiences of the EU, the United States, and Hong Kong: Firstly, drawing on the experience of other jurisdictions in regulating "greenwash" and China's national conditions, it is essential to strengthen the construction of the legal system and build a unified ESG information disclosure standard; secondly, a diversified social supervision system should be developed, including the active development of the third-party independent audit institutions and the play of the supervision power of the investor and the public; and lastly, the effectiveness and traceability of ESG information management should be enhanced by relying on the digital technology.