When the Lie Hurts More: Comparing Investors’ Reactions to Socialwashing and Greenwashing

Over the last decades, the scope of sustainability-related communications – and consequently their misleading use – has expanded from lying about the environment (greenwashing) to deceptions regarding social issues (socialwashing). This research compares these two forms of corporate misleading communications, socialwashing and greenwashing, and investigates their effects on investors’ intentions. Our experimental results suggest that socialwashing is more detrimental for investment intentions than greenwashing. Because individuals self-recognize more with human victims rather than the environment, investors perceive the crisis caused by socialwashing as more severe than greenwashing. Notably, when companies harm other human beings, the divergence between claims and behavior is less relevant compared to events impacting the environment. The article contributes to deepen the understanding of variation in investor reactions across different corporate washing contexts and raises awareness of corporate risks when communicating social issues