Mismatches Between Environmental Performance and Sustainable Investments as Signals of Misleading Green Corporate Messaging

This study investigates the misalignment between ESG environmental (E) scores and actual sustainable investment activities, addressing a critical gap in the literature regarding the reliability of ESG metrics. While prior research has highlighted concerns about greenwashing, few studies have systematically linked ESG ratings to EU Taxonomy-based capital expenditure (CapEx) indicators. This study aims to bridge this gap by developing a novel firm-level typology that captures discrepancies between reported environmental performance and real investment commitments. The empirical analysis is based on Bloomberg data for European firms over the 2022–2024 period and employs cluster analysis alongside non-parametric statistical testing (Kruskal–Wallis) to assess intergroup differences. The findings reveal substantial heterogeneity across firms, including cases where high ESG ‘E’ scores are not supported by aligned sustainable investments and instances of under-recognised investment activity. These inconsistencies suggest potential distortions in ESG signalling and indicate limitations in current rating methodologies. The study contributes to the literature by integrating ESG evaluation with EU Taxonomy metrics and proposing a refined analytical framework for detecting greenwashing risks. From a practical perspective, the results provide valuable insights for investors, regulators and policymakers seeking to enhance the credibility, comparability and transparency of sustainability disclosures.