Do effective corporate boards prevent greenwashing?

The transition towards sustainable practices has increased the environmental effort deemed essential to justify a corporation’s existence. Further, we know this process of change has sometimes resulted in a difference between the effort that is reported to the public and the implementation efforts. However, for many corporates, the quest for better governance has led to a transformation of the board, encouraging board independence, gender diversity, and other socially responsible initiatives. Drawing on legitimacy theory, we discuss the relationship between implementing green practices and green communication and, more specifically, any divergence between the two. Using a large sample of firms across 58 countries over a 19-year period, we employ an index to measure the discrepancy between green operations and the practices being communicated, which we mapped to each firm’s board structure. The results show that larger boards and more gender-diverse and independent boards are associated with preponderance in green communication vs green practices implementation. We interpret this imbalance as a strategy to participate in the public discourse with the aim of seeking moral legitimacy. Conversely, CEO duality is associated with a discrepancy in the opposite direction, where firms concentrate more on implementing green practices than talking about them. This suggests that these firms might be more interested in gaining pragmatic legitimacy from their stakeholders. Overall, our results suggest that certain board characteristics are a significant determinant of the adoption of different legitimacy seeking strategies.