GREENWASHING IN CORPORATE SOCIAL RESPONSIBILITY: LEADERSHIP ETHICS AND LEGAL ACCOUNTABILITY

INTRODUCTION

In today’s era of globalization, the organizations are growing rapidly Competing with other organization in the matter of profit turnover consumer relation and engagement as well as market share. Organizations while growing take from the society as the society and members of it as their customers and consumers initially and eventually driving their organization’s growth. In order to make the organization give back to the society a mechanism called Corporate Social responsibility has been developed.

Corporate social responsibility plays a major role in an organization as it is self-regulating business model that makes the organ socially accountable to do something for society. It involves activities done by the organization and its stakeholders adopt a sustainable and ethical behaviour towards the societies through the financial gains and profits that they have gained from the society itself. This CSR initiatives by the organizations involve a step towards sustainability working for the environment climate Working for the vulnerable groups in the society their benefit and doing philanthropic activities that would create a major one other individuals.

Whether the CSR initiates are taken in a responsible and ethical manner is to be decided by the stakeholders of the company. They might as well create an illusion that the corporate social responsibility is met by the organization without doing so. This phenomenon is called Green washing that mostly companies do to get rid of the pressure of doing CSR initiates and to focus more on financial gains and profits at large. Greenwashing erodes the very object of corporate social responsibility as this would prevent the society from taking the benefit from the organizations and it would happen so that the company’s CSR efforts are met even though the society has not gained anything.

In India in order to ensure the corporate social responsibility is done by the organization that are major legal and regulatory frameworks that govern corporate social responsibility such as the Companies Act SEBI Regulations and Consumer Protection. Though there are regulations the compliance and implementation still would depend on the accountability of the organization and its stakeholders.

The study analysis these legal and regulatory frameworks finding the gap loopholes in compliance by the organizations as well as understand how greenwashing incorporate social responsibility is an accountability of the stakeholders an ethical leadership is essential for prevention of such an evil to the society.

LEGAL AND REGULATORY FRAMEWORK GOVERNING CORPORATE ACCOUNTABILITY

Corporate Social Responsibility (CSR) creates a positive obligation upon the organisations and companies to take initiates for the welfare of society, sustainability of the environment and economic growth. Corporate social responsibility initiatives were taken before by organizations as well voluntarily yet it got its recognition as a mandate under the Companies Act 2013.[1] The “SEBI regulations on business responsibility and sustainability reporting[2]” an ESG disclosure as enhances their transparency. The Consumer Protection Act 2019[3] also plays major role by addressing the issue of misleading advertisements that the companies might to make false claim on environmental sustainability which would fall under the unfair trade practice.

• Companies Act 2013 and CSR Compliance

This section 135 of the Companies Act 2013 deals with the corporate social responsibility by organizations in India. The provision creates a mandate upon a certain section of companies that have taken CSR initiatives under the legislation. The companies With net worth of RS 500 the Road or more, Turnover of RS 1000 crore or more, Or a net profit of RS 5 crore or more fall within the financial threshold under this provision that are mandated perform CSR activities.[4]

The companies that fall under this financial threshold have to constitute Corporate Social Responsibility Committee off the board that would consist of three or more directors out of which at least one director shall be an independent director.[5]The board is responsible to make a under this subsection three of section 134 that would disclose the corporate Social Responsibility Committee composition.[6]

The board that is created in every company has to ensure that the compliance is in the policy are met and the company spends at least 2% of the average net profits of the company made during the three immediately preceding financial years in pursuit to the corporate social responsibility.[7]And if there is any failure by the company to spend that particular amount the board has to make the report of it.

The company’s (Corporate Social Responsibility Policy Rule )2014[8] R/W with the section 135[9] of the Company’s Act 2013 works as an operational framework for the CSR initiatives that are taken by the organization. The rules govern project and programs that are excluded under CSR and the implement of the policy for CSR activities of the company. It also imposes restrictions in order to make that the CSR activities are ethical rating the inclusion of reports off the board on the company website.[10]

The provision of the Companies Act and the CSR role act as the for ensuring that CSR activities are regulated and after the benefit of the society at large. Yet this vision behind the provision Has been highly misused and critique. There exists lack of implementation and monitoring of these mechanisms as it is basically based on self-reporting and there is no assessment for the same, moreover the companies have taken it as a to just tick the two percent sign that would lead to greenwashing.[11]

• SEBI Regulations and CSR Compliance

SEBI (Listing a obligations and disclosure Requirements) Regulations 2015 Creates an obligation on the entities that are to be listed to disclose and be transparent about the activities they initiate which would include the CSR and ESG initiates taken by the company.[12]

The Business Responsibility and Sustainability Report framework of SEBI was introduced on March 2019 structured around the “9 core principles of National Guidelines on Responsible business conduct”.[13] This framework focuses on the ESG parameters and disclosure of the same that are performed by the listed company through a report.[14] The framework categorizes three different sections as Section A Section B and Section C to give a categorical disclosure mechanism.

This regulation by SEBI has enhanced the disclosure and transparency mechanism related to CSR and ESG yet most of the data in the report is generated by the company itself and their questions about the accountability as the owners on the company to portray as a company with ESG initiatives gives rise to greenwashing and selectively presenting activities of the company.

• Consumer Protection

The companies buy Green Washing on the corporate social Responsibility and ESG requirements not only prevent the society from taking the benefit but mislead the consumers themselves. The Consumer Protection Act 2019 ensures that the consumer has the right grievance redressal against any unfair trade practice or misleading advertisements and claims this would also include the company’s misleading claims related to the initiates for sustainability of the environment.[15]

The Central Consumer Protection Authority has laid down guidelines for prevention and regulation of greenwashing or misleading environmental claims 2024 in furtherance to the Guidelines for prevention of misleading advertisements and endorsements for Misleading Advertisements 2022.[16] The guidelines prohibits companies from engaging in greenwashing or misleading environmental claims mandating adequate disclosure mechanism for any environmental claim by the organization And regulate such disclosure.

• Judicial Precedents

Greenwashing CSR is an emerging issue and has not been recognized through judicial precedence much more in India Yet there are various international precedents that decided cases on greenwashing in CSR. One of the most important climate litigations was the case of Milieudefensie v. Royal Dutch Shell plc[17] wherein the question was about the CO2 emissions but the company Shell. The District Court gave its opinion that that was the duty to care that had to be followed by a shell to reduce CO2 emissions and reduction of 45%, yet when was appealed It was that they were meeting their environmental accountability and governance according to the law.[18] Now this case stands as a major example of how Company’s active cans affect a major part of the while portraying to perform their environmental accountability. In another case Earth Island Institute v. Coca Cola Co.[19] the issue was Coca Cola’s marketing about being sustainability that challenged by the Earth Island institute. It was alleged that Coca Cola was violating Colombia’s Consumer Protection Procedure Act and this was the deceptive for the consumers and general public.[20]

• GREENWASHING IN CORPORATE SOCIAL RESPONSIBILITY (CSR): ANALYSIS

“Green Washing to a scenario where companies create a misleading impression of their environmental efforts typically by exaggerating on misrepresenting the company’s commitment to sustainability thus threatening consumer trust and the global push for sustainability”[21] coined by environmentalist Jay Westerveld (1986). In greenwashing the organization and business portray hat they are environment friendly true business tactics and misleading advertisements and notions.

With the growing climate and sustainability failures corporate social mechanism and ESG became an integral initiate for an organization’s corporate governance. The mandate of taking an initiative for environmentally sustainability, social governance and philanthropic is put on the organizations to ensure they give back to the society. This initiate do is for a noble cause in order to protect the environment and for the social welfare of the society yet whether it is actually followed or the companies just portray about it is a larger question.

“The Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims 2024”[22] gives the definition of greenwashing as “a deceptive or misleading practice which includes concealing omitting or hiding relevant information by exaggerating making vague or false statements using misleading words symbols imagery or any unsubstantiated environmental claims.”[23]

Greenwashing by the companies practice to portray that the corporate social responsibilities are met isn’t evil to the society as they might port meet the criteria that has been given by the Companies Act yet the initiates taken by the company would not benefit the social welfare or the environment does create a legal loophole. The stakeholders of the organization are legally accountable for the companies when they engage in greenwashing as it erodes the trust of the consumers and disrupts the corporate governance mechanism.[24]

Green washing as a practice erodes the very purpose of the CSR mechanism that has been proposed by the legislature as a mandate for the organization falling in certain financial thresholds. This not creates a loophole to disrobe the society from the benefit that the organization was supposed to provide and the sustainability that has to be maintained by the organization but also how would the leaders in an organization decides the initiates taken by it.[25]

Leadership is deeply connected with decision of how initiates in an organization is taken and how a balance between the society as well as the growth of the organization is maintained by the stakeholders. When the stakeholders fail to maintain ethical leadership, evils like greenwashing practices come into so that they can tick box the CSR and ESG criteria without giving the society what it deserved.

RECOMMENDATIONS

There has been an increase greenwashing by corporations to show their corporate social responsibility and to deceive the general public. There is a of strengthening the regulatory oversight by making an authority so that the problem of self-reporting can be reduced and disclosure is proper. The consumer protection mechanism though is developing to protect individuals from greenwashing and preventing yet it is in its emerging and needs strength for implementation. Moreover, there a larger requirement for transparency in the process of disclosure and the third-party verification involved in such process.

CONCLUSION

The paper demonstrates that Indian legal has developed regulatory and legal frameworks governing corporate social responsibility mechanisms of an organization. The companies, CSR Rules 2014, Sebi regulations and BRSR framework, ensures that an organization complies to the CSR mechanism by taking initiates. However, the legal and regulatory frameworks rely by the data given by the organization itself and our compliance oriented.

Greenwashing survives regulatory loopholes due to ambiguity weak enforcement by which the companies only portray to take CSR initiates rather than actually performing such activity for the welfare of the society at large. They do so in order to maximize their profit maintain their reputation and brand image and to show good governance at the cost of sustainability and welfare of this society being neglected.

The role of corporate leader is very essential in an organization as a leader would ethically take decisions on the CSR initiates ensuring that the corporate social responsibility compliances are met by the organization without any legal loophole. Thus, an ethical by maintaining transparency accountability justice and the relationship can ensure greenwashing is prevented and the CSR initiates are taken with complete transparency for the welfare of the society and environment.

REFERENCE(S):

Primary Sources

Legislations

The Companies Act, 2013, No. 18 of 2013 (India)

The Consumer Protection Act, 2019, No. 35 of 2019

Securities and Exchange Board of India Act, 1992, No. 15 of 1992 (India)

Rules and Regulations

Companies (Corporate Social Responsibility Policy) Rules, 2014 (India)

Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (India).

Circulars and Guidelines

Securities and Exchange Board of India, Circular No. SEBI/HO/CFD/CMD-2/P/CIR/2021/5t62 (India).

Central Consumer Protection Authority, Guidelines for Prevention ad Regulation of Greenwashing or Misleading Environmental Claims (2024) (India).

Secondary Sources

Disha Kurmi & D.K. Nema, Corporate Compliance with CSR Under Section 135 of the Companies Act 2013: A Legal and Governance Analysis, 8 INT’L J. RSCH. COM. & MGMT. STUD. 170-78 (2026),

Bhushan Madhukar Kathar, “Corporate Social Responsibility CSR obligations under the Companies Act 2013: Law and Practice”, 8 INT’L J. L. MGMT. & HUMAN. 1405(2025).

[1] Grantham Research Institute on Climate Change and the Environment, Promoting a Transition with Inclusion in India: The Role of Business Responsibility and Sustainability Reporting (BRSR), LONDON SCH. ECON. & POL. SCI.,

Sanya Darkshan Kishwar, Vasatika Saraswat, Rishni Agarwal, Exploring the True Shade of Green: a critical examination of Central Consumer Protection Authority’s guidelines on corporate greenwashing, 12 INT’L J. CONSUMER L. & PRAC. (2024).

Priya A. Jagadish & Ryle James Ammagol, An Unspoken Reality of Corporate Greenwashing in India’s ESG Sphere, AIJVBCL (2025).

Sejal Jaiswal, Greenwashing and the Ethics of CSR, INT’L J. FOR MULTIDISCIPLINARY RSCH.

Rohit N.M. & Jeeva M., Mitigating Greenwashing in Corporate Social Responsibility: Challenges, Impacts and Optimal Solutions, SAMVAKTI J. RSCH. BUS. MGMT. (2025).

[1] Ms. Disha Kurmi & D.K. Nema, Corporate Compliance with CSR Under Section 135 of the Companies Act 2013: A Legal and Governance Analysis, 8 INT’L J. RSCH. COM. & MGMT. STUD. 170-78 (2026), https://ijrcms.com/uploads2026/ijrcms_08_585.pdf.

[2] Security and Echange Board of India Act, 1992, No. 15 of 1992, (India).

[3] The Consumer Protection Act, 2019, No. 35 of 2019 (India).

[4] Companies Act, 2013, §135 (India).

[5] Ibid.

[6] Companies Act 2013, §135(2), No. 18 of 2013 (India).

[7] Companies Act, 2013, §135(4) No. 18 of 2013 (India).

[8] Companies (Corporate Social Responsibility Policy) Rules 2014 (India).

[9] Companies Act, §135, No. 18 of 2013 (India).

[10] Supra note 14.

[11] Bhushan Madhukar Kathar, “Corporate Social Responsibility CSR obligations under the Companies Act 2013: Law and Practice”, 8 INT’L J. L. MGMT. & HUMAN. 1405(2025) OI: https://doij.org/10.10000/IJLMH.1110416   

[12] Security and Exchange Board of India (Listing a obligations and disclosure Requirements) Regulations, 2015.

[13] Grantham Research Institute on Climate Change and the Environment, Promoting a Transition with Inclusion in India: The Role of Business Responsibility and Sustainability Reporting (BRSR), LONDON SCH. ECON. & POL. SCI., https://www.lse.ac.uk/granthaminstitute/publication/promoting-a-transition-with-inclusion-in-india-the-role-of-business-responsibility-and-sustainability-reporting-brsr/.

[14] Securities and Exchange Board of India, Circular No. SEBI/HO/CFD/CMD-2/P/CIR/2021/562 (May 10, 2021) (India).

[15] Sanya Darkshan Kishwar, Vasatika Saraswat, Rishni Agarwal, Exploring the True Shade of Green: a critical examination of Central Consumer Protection Authority’s guidelines on corporate greenwashing, 12 INT’L J. CONSUMER L. & PRAC. (2024),https://doi.org/10.55496/TAOJ7733.

[16] Central Consumer Protection Authority, Guidelines For Prevention And Regulation Of Greenwashing Or Misleading Environmental Claims, (2024) (India).

[17] Milieudefensie v. Royal Dutch Shell plc, 200.302.332/01 (Netherlands).

[18] Crrop, Milieudefensie v. Royal Dutch Shell plc, https://climaterightsdatabase.com/2021/05/26/milieudefensie-and-others-v-royal-dutch-shell-plc/.

[19] Earth Island Institute v. Coca Cola Co, 2021-CA-001846-B.

[20] Earth Island, https://www.earthisland.org/index.php/advocates/suit/coca-cola-plastic.

[21]Priya A. Jagadish & Ryle James Ammagol, An Unspoken Reality of Corporate Greenwashing in India’s ESG Sphere,AIJVBCL (2025), https://www.vbcllawreview.com/post/an-unspoken-reality-of-corporate-greenwashing-in-india-s-esg-sphere#_ftn8.

[22] Central consumer protection authority, The Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims (2024) (India).

[23] Central consumer protection authority, The Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims (2024) (India).

[24] Sejal Jaiswal, Greenwashing and the Ethics of CSR, INT’L J. FOR MULTIDISCIPLINARY RSCH, https://www.ijfmr.com/papers/2024/5/27029.pdf.

[25] Rohit N.M. & Jeeva M., Mitigating Greenwashing in Corporate Social Responsibility: Challenges, Impacts and Optimal Solutions, SAMVAKTI J. RSCH. BUS. MGMT. (2025),  DOI : 10.46402/sjrbm.2025.53.