ORIGINAL RESEARCH
Give a Hand or a Tournament? The Impact
of Green Investment on Corporation ESG
Commitment and Greenwashing
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Central University of Finance and Economics, Beijing 102206, China
Submission date: 2023-11-17
Final revision date: 2023-12-10
Acceptance date: 2023-12-16
Online publication date: 2024-04-25
Publication date: 2024-06-07
Corresponding author
Runtian Zhang
Central University of Finance and Economics, Beijing 102206, China
Pol. J. Environ. Stud. 2024;33(4):4947-4957
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ABSTRACT
The ESG framework has made a substantial contribution to environmental sustainability,
with corporate ESG performance increasingly being recognized as a key factor in green
investment decisions. However, intensifying competition among corporations to pledge low-carbon
initiatives, aiming to attract limited green investments, has transformed ESG commitments into
a competitive tournament. This suggests that a corporation’s public commitment to sustainability
often supersedes its actual environmental actions in securing green investments. Despite the scrutiny
of ESG commitments, a discrepancy risk persists between these commitments and their actual
performance, such as greenwashing. This study develops a principal-agent comparative
model to investigate the mechanisms and impacts of green investment decisions that are based
on commitments and actual outcomes. The analysis reveals that the efficiency of commitmentbased
investments hinges on the investor’s capacity for verification, with an essential threshold
of accuracy for policy effectiveness. This verification process becomes significantly more
important when companies derive greater profits from green investments. Unlike outcome-based
investment strategies, commitment-based approaches may result in lower levels of carbon reduction
by companies. However, they enable investors to curtail non-productive expenditures and enhance
capital utilization efficiency. Consequently, the potential of commitment-based investments
to enhance overall societal benefits depends on the accuracy of verification and its associated
costs.