The Paradox of Lopsided ESG Branding: Critiquing the Overemphasis on Environmental Aspects at the Cost of Marginalizing Social and Governance Dimensions in Corporate Sustainability Communications
Authors: Routray Bibhuti Bhusan 
Published: April 2024

As corporate sustainability initiatives have gained traction, marketing
strategies under the banner of environmental, social, and governance
(ESG) principles have proliferated. However, a concerning trend has
emerged wherein organizations disproportionately emphasize the
environmental (’E’) dimension while neglecting the social (’S’) and
governance (’G’) aspects. This practice, often termed ”greenwashing,”
poses significant risks to both marketing efficacy and genuine ESG
progress.

This paper examines the pitfalls of this selective ESG marketing focus
through the lenses of consumer scepticism, regulatory scrutiny, and
organizational misalignment. Synthesizing insights from recent scholarly
works and industry reports, we underscore the imperative for a holistic
and authentic ESG marketing approach that upholds all three pillars.
Ultimately, we contend that only through balanced ESG integration can
organizations safeguard marketing credibility, cultivate consumer trust,
and drive meaningful sustainability transformations.

The scepticism of customers toward corporate sustainability claims has
intensified, particularly amid perceived greenwashing attempts. Research
indicates that when organizations present an imbalanced ESG narrative
emphasizing environmental achievements while downplaying social and
governance aspects, consumers are more likely to view these efforts as
disingenuous and self-serving, eroding trust and brand credibility
[Torelli et al., 2020; Bhattacharya & Sen, 2004]. Furthermore,
consumers are adept at detecting incongruities between an organization’s
rhetoric and its actual practices, potentially leading to negative brand
perceptions and backlash when environmental marketing claims contradict
questionable social or governance conduct [Marquis et al., 2016].

Regulatory bodies are also increasing scrutiny over the accuracy and
completeness of ESG disclosures and marketing claims. The U.S. Federal
Trade Commission has actively targeted misleading environmental
marketing, while the Securities and Exchange Commission is proposing
rules mandating comprehensive ESG reporting, including social and
governance metrics [SEC, 2022]. Firms with imbalanced ESG practices
face heightened risks of regulatory action, fines, and shareholder
litigation [Delmas et al., 2013].

Moreover, the selective ’E’ focus in ESG marketing can perpetuate
organizational misalignment and hinder effective sustainability
integration. Research demonstrates that companies pursuing holistic,
integrated ESG strategies encompassing all three dimensions outperform
peers with isolated environmental initiatives, experiencing operational
efficiencies, financial outperformance, and superior long-term value
creation [Ioannou & Serafeim, 2019; Edmans, 2011]. A fragmented
approach undermines an organization’s ability to attract top talent,
foster innovation, and achieve genuine sustainability impacts across
environmental, social, and governance domains.

To overcome these pitfalls, organizations must adopt a holistic and
authentic ESG marketing strategy aligned with comprehensive
sustainability practices, transparent reporting, stakeholder engagement,
aligned executive incentives, and cross-functional collaboration. This
entails integrating environmental stewardship with robust social
responsibility and ethical governance initiatives, embracing recognized
ESG reporting frameworks, actively soliciting stakeholder input, tying
leadership compensation to measurable ESG metrics, and cultivating
specialized ESG marketing expertise.

By upholding all three pillars of ESG, organizations can enhance
marketing credibility, mitigate greenwashing risks, and drive meaningful
sustainability progress. This paper underscores the criticality of
balanced ESG integration, contending that only through a holistic
approach can businesses leverage the full potential of sustainability to
create long-term value for stakeholders and catalyse positive
environmental, social, and governance impacts.