Regulating Greenwashing: The Effectiveness of EU Legal Instruments in Ensuring Sustainability
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- This thesis addresses the issue of greenwashing in corporate sustainability communication and analyzes the effectiveness of the European Union’s legal instruments, particularly the CSRD. Greenwashing refers to misleading communication by a company about its practices or products, falsely presented as environmentally friendly, which undermines the credibility of commitments and stakeholder trust. To tackle this, the EU has gradually established several instruments aimed at enhancing the transparency and reliability of sustainability reporting. The analysis begins with a study of existing European instruments such as the Directive on Unfair Commercial Practices, the Non-Financial Reporting Directive (NFRD), the SFDR regulation on sustainable finance, and the Taxonomy Regulation. The second chapter focuses on the new CSRD directive, which expands non-financial reporting obligations, introduces the principle of double materiality, imposes common standards (ESRS), and strengthens verification and sanctions, aiming to make reports more credible and limit greenwashing. The third chapter assesses the legal effectiveness of the CSRD against greenwashing by comparing it with the South African experience, a pioneer in integrated reporting. The analysis of the South African framework, combining soft law and recent legislative developments, highlights its strengths and weaknesses in terms of oversight, standardization, and implementation, offering insights to strengthen the CSRD. The study highlights that, for the CSRD to be fully effective against greenwashing, major challenges must be addressed, particularly European harmonization, strengthening companies’ capacities, and establishing robust and coherent control mechanisms.