DFCRC-Digital Finance Meets Sustainability: Shareholder Activism, ESG Rating Divergence, and Greenwashing Detection

This project will examine three interconnected areas at the intersection of sustainable finance and digital innovation: the impact of failed ESG shareholder proposals, the causes and consequences of ESG rating divergence, and the identification and reduction of greenwashing. lt aims to explore how investor activism shapes corporate behavior, investigate the drivers of inconsistent ESG ratings, and develop tools to detect discrepancies between corporate ESG disclosures and performance. Together, these studies will offer insights into improving transparency, reducing information asymmetry, and supporting sustainable investment practices, aligning with the Digital Finance CRC's mission.

This project focuses on three key areas where sustainable finance and digital innovation intersect. First, it examines how companies respond to environmental, social, and governance (ESG) proposals that shareholders put forward but fail to pass, exploring the impact of these unsuccessful efforts on corporate behavior. Second, it investigates why companies often receive conflicting ESG ratings from different agencies, analyzing the causes of these inconsistencies and their implications for investors and businesses. Third, it aims to develop methods for detecting and reducing greenwashing by identifying discrepancies between what companies report about their ESG practices and their actual performance. By addressing these issues, the project seeks to improve the clarity and reliability of ESG information, reduce confusion for investors, and encourage companies to be more transparent and accountable. These efforts align closely with the Digital Finance CRC's mission to support sustainable and responsible financial practices.