Forensic Accounting Approaches to Detecting and Preventing Greenwashing and Data Manipulation in ESG Reporting
Year: 2025
Type: article
Abstract: The rapid rise of environmental, social, and governance (ESG) investing, , driven by regulations like the EU’s Sustainable Finance Disclosure Regulation (SFDR) and the International Sustainability Standards Board (ISSB) standards, has intensified corporate greenwashing through selective disclosure and data manipulation. This study examines the mechanisms underlying ESG reporting misconduct, including exaggerated sustainability claims and supply chain opacity, and proposes forensic accounting as a countermeasure. To address these challenges, it proposes forensic accounting as an effective countermeasure. A cross-sector analysis further reveals the widespread exploitation of regulatory ambiguities, with energy firms. For example, inflating renewable use while offloading emissions. In light of these findings, it introduces a multidimensional verification framework that integrates blockchain traceability, AI-driven semantic analysis, and satellite monitoring, collectively enhancing the ability to detect inconsistencies in ESG disclosures. The results underscore the limits of traditional audits in detecting complex ESG fraud, thus highlighting the need for mandatory third-party verification, standardized disclosure metrics, and internationally coordinated regulatory enforcement. By integrating advanced technology with forensic methods, accountability is strengthened, and sustainability disclosure is transformed from performative compliance to evidence-based practice.
Author: Qihan Sun
Institution: Beijing Normal-Hong Kong Baptist University
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4412495252