The Law and Economics of Corporate Social Responsibility and Greenwashing

Abstract

In this symposium article, I explore the concept of greenwashing in more depth. In the first part of the article, I start with first principles, looking at the origins of greenwashing, its definitions, and identifying the economic incentives that lead firms into the practice. The second part of this article examines the legal structure that allows greenwashing to occur, and with it, explores the pervasiveness and extent of greenwashing. The third part of this article articulates the harms of greenwashing. Intuitively, greenwashing involves deception, falsity, and hypocrisy that reflexively seem problematic. Precisely identifying the actual harm inflicted by some forms of greenwashing, however, is much more difficult to pinpoint. The last portion of the paper outlines the law and economics analysis to argue that greenwashing might, in the aggregate, represent one of the most serious challenges to achieving corporate social responsibility in business today.

Keywords: Corporate Social Responsibility, CSR, greenwashing, labor standards, environment