Greenwashing in sustainability reporting: evidence from Malaysia

Purpose The purpose of this study is to investigate the extent of greenwashing in the sustainability reports of Malaysian public-listed companies. Design/methodology/approach The presence of two forms of greenwashing, namely, via readability and tone, was examined in the sustainability reports of a sample of 292 firm-year observations of Malaysian public-listed companies that maintained their position among the top 100 in terms of market capitalisation from 2019 to 2022. Multiple regression analysis was performed to test the study hypotheses. Findings Sample companies with inferior sustainability performance did not issue sustainability reports that were more readable and misleadingly positive in tone. This suggests that Malaysian public-listed companies are less likely to engage in these forms of greenwashing in their sustainability reports. Research limitations/implications Only two forms of greenwashing were examined. Furthermore, the scope of study was limited to large public-listed companies. Practical implications This study has practical implications for regulators and preparers on improving the sustainability reporting practices of Malaysian companies. Originality/value This study contributes to the limited research on greenwashing in the sustainability reports of Asian companies.