Red flags in green promises: a framework for identifying greenwashing risk in corporate climate pledges

Can investors tell net-zero pledges from greenwashing?

Elizabeth Brown, Angel Hsu and Diego Manya develop a framework for identifying greenwashing risk in corporate climate pledges in their paper "Red flags in green promises: a framework for identifying greenwashing risk in corporate climate pledges" (2026).

They assemble a dataset of 4131 companies from the Net Zero Tracker, CDP climate disclosures, and InfluenceMap LobbyMap scores, then assess greenwashing risk along 7 dimensions.

Their main conclusions include:

• 96% of pledging companies exhibit at least one greenwashing red flag, and 12% are flagged on at least 4 of the 7 dimensions.
• Lack of Scope 3 coverage is the most common gap, present in 70% of pledging companies and 78% of those in East Asia and the Pacific, where value-chain emissions remain largely unaddressed.
• North American firms stand out on three indicators: 34% lack interim targets, 55% rely on questionable offsets, and 18% engage in lobbying that contradicts their climate commitments.
• Questionable offset reliance reaches 69% among net-zero pledgers, well above the 40% observed across the broader sample, which shows offset dependence is a structural feature of most pledges.
• Moving from low to high transition ambition cuts the predicted probability of Scope 3 greenwashing from 57% to 17% and lobbying greenwashing from 95% to 43%.
• Fossil fuel companies show 99% greenwashing risk, driven by 71% questionable offset use and 57% obstructive lobbying, while metals and mining firms reach 98%, with 70% recording negative lobbying activity.

This article shows misalignment is the norm rather than the exception in transition plans, and the existence of a pledge is a starting point but not a sufficient signal to prevent greenwashing.

The findings reinforce the credibility expectations of many transition planning frameworks now requiring interim milestones, restricted offset use, and aligned lobbying.

The seven indicators are coded as binary flags, treating the absence of a Scope 3 target identically across sectors where value-chain emissions vary a great deal in materiality.

The framework also relies on self-reported CDP data and a single LobbyMap snapshot rather than tracking corporate behaviour through time.

A graded version of the framework, paired with longitudinal tracking of pledge evolution, would help sort improving disclosers from persistent laggards.