Uncovering Greenwashing: Investigating Impression Management Gap in Corporate Reporting

Abstract

The current study examined the impression management gap between sustainability and management reports, which in this study serves as a proxy for greenwashing in sustainability reporting. The study sample comprised 192 reports from 24 companies, covering the period 2020–2023. Impression management gaps were estimated across four dimensions—tone, analytical thinking, authenticity, and clout—using textual analysis with the Linguistic Inquiry Word Count software. Our findings reveal significant impression management gaps for tone, clout, and analytics dimensions throughout the entire research sample, confirming a more pronounced use of impression management techniques in sustainability reporting. Despite increasing regulatory pressure during the study period, the calculated gaps did not show signs of decreasing. The results further indicate a high likelihood of greenwashing in the Services and Manufacturing sectors, and a lower likelihood in the Utilities sector. Such gaps risk misleading stakeholders by shaping perceptions that diverge from a company’s actual sustainability practices. Our findings suggest that greenwashing can be effectively detected through textual analysis of disclosures, particularly when conducting comparative studies between different reports. Building on these results, we argue that targeted reporting standards, advanced assurance methodologies, and clearer boundaries for impression management are essential to curbing greenwashing and strengthening the integrity of sustainability communication.

1. Introduction

Over the past few decades, environmental, social, and governance (ESG) aspects, or sustainability, have become a key part of a new competitive strategy for businesses [1], influencing corporate decision-making and helping to preserve a positive reputation [2]. Sustainability reports aim to provide stakeholders with a thorough and accurate description of the company’s environmental and social performance, as well as the effects of its operations [3]. These reports enhance transparency between companies and investors, which in turn influences capital market returns [4]. Several reporting frameworks, models, guidelines, and other associated initiatives have been developed to guide companies in preparing sustainability reports [5]. However, the wide range of options makes it hard to compare companies and assess their sustainability performance effectively [6]. Additionally, due to the nature of the information reported and the lack of third-party verification [7,8], sustainability reports are widely criticized for their limited reliability and potential for greenwashing practices. Scholars agree that greenwashing is more widespread than ever before [9] and continues to pose a significant risk to all parties involved [10]. Although new regulations are being introduced to improve reporting quality [11] and to prevent or mitigate the growing number of greenwashing incidents [12,13], issues with accuracy, trustworthiness, and overall quality of sustainability reports still remain.

In this paper, we conceptualize greenwashing as a form of deception and inconsistency. Although a systematic review [14] highlights that greenwashing is a complex and inconsistently defined phenomenon across different contexts, we focus on its misleading nature [15] or deceptive practice [16]. It involves companies manipulating [17,18] or selectively presenting information [9,19], often in ways that mislead stakeholders [20]. Some researchers [21] suggest that greenwashing should be viewed through the lens of impression management. According to [22], greenwashing falls within a broader framework in which companies use reporting to highlight positive aspects and downplay negative ones. Studies have found that many companies use reports as tools for impression management [22]. In this context, impression management is used as a proxy for greenwashing, referring to how companies shape perceptions through written, numerical, and visual content in their reports. This process aims to present performance positively and manage corporate image [23], often creating a favorable [24] but misleading impression (thus greenwashing rather than signaling) [25].

Companies employ a range of distinct impression management techniques in their communication [26,27,28,29] to establish or restore organizational legitimacy, control impressions, and capture the attention of stakeholders. When sustainability reports are used for greenwashing rather than disclosure, they tend to be overly positive—focusing solely on the positive aspects of corporate sustainability while omitting issues, expenses, and challenges. Textual or rhetorical manipulation techniques, such as overly optimistic language [30], reading difficulties, a lack of authenticity, and technical jargon, are often employed to influence readers, gain legitimacy, improve or preserve a corporate image, control an impression, and overall greenwash.

Impression management primarily occurs in less-regulated narrative disclosure [31], and appears across various corporate reports, including risk and risk management disclosures [32], management discussions and the analysis parts of annual reports [33,34], 10-K reports [35,36,37,38], chief executive officer and chairperson letters [39,40,41,42], chairperson’s statements [43,44,45], annual reports [46,47], mission statements [48], earnings tweets [29], and sustainability [49,50] or corporate social responsibility reports [51]. This suggests that impression management can be applied to nearly any form of corporate communication. However, most studies focus on a single report type [39,40,41,42,46,47,51], within a single industry, and typically examine a single linguistic feature—usually tone [52]. Some research [38,53,54] has explored multiple textual dimensions, such as analytical thinking, clout, authenticity, and emotional tone, but longitudinal studies covering several dimensions remain rare. For example, Ref. [38] tracked changes over time but offered limited insights, while [53,54] found only minor shifts in estimated values. Despite growing interest, key research gaps remain: (1) few studies link impression management directly to greenwashing; (2) most focus on one type of corporate report; (3) longitudinal research is scarce; and (4) cross-sector analysis is limited. We argue that a comparative approach, considering differences in communication techniques across industries and companies, is essential to more accurately identify greenwashing.

Traditional greenwashing metrics focus on content-based inconsistencies [55], gaps between reported claims and actual performance [56,57], net-zero greenwashing indicators [58], visual or symbolic cues [59], machine learning-based detection [60], or structured frameworks for analyzing corporate communication [61]. In contrast, our approach is based on language analysis—it focuses on how companies communicate—and does not rely on external performance data or third-party assessments, instead evaluating the tone and framing of disclosures. Moreover, this makes it especially useful for detecting subtle forms of greenwashing that may not be evident solely through performance metrics. Therefore, in the current study, we investigate greenwashing in corporate sustainability reports by analyzing the impression management gap between sustainability and management reports. We define an impression management gap as the measurable difference in linguistic features—such as tone, authenticity, clout, and analytical thinking—between two types of corporate disclosure: sustainability reports and management reports from the same company. Recognizing that companies may adopt different communication styles based on their industry and managerial practices, we use management reports as a benchmark to calculate the impression management gap in sustainability reports across each of the textual dimensions. This internal comparison enables a more accurate assessment of rhetorical manipulation, as it controls for company-specific communication styles and mitigates cross-company bias. Moreover, we additionally explore the impression management gap across sectors and conduct a longitudinal analysis, addressing the research gaps in previous studies.

Our study adds value to impression management and greenwashing studies by analyzing four impression management dimensions (clout, authenticity, analytical thinking, and tone) in two types of corporate reports (management and sustainability) for an extended period (2020–2023) and for companies operating in various sectors (utilities, services, manufacturing, and residual) and countries (the Baltic States). We take the approach that the impression management gap is a suitable measure to reflect greenwashing in sustainability reports, while controlling for industry- and company-specific factors.

The article is structured as follows: Section 2 presents a literature review, discussing the relationship between greenwashing and impression management techniques, as well as the possibilities of detecting the impression management gap or greenwashing through textual analysis of sustainability reports. Section 3 outlines the research methodology used in our study. Section 4 presents the main findings, and is followed by Section 5, which discusses these findings and their implications. The Section 6 is dedicated to conclusions.

2. Theoretical Background

2.1. Relationship Between Greenwashing and Impression Management

Greenwashing has been widely recognized in the academic literature as being identifiable through the language used in corporate disclosures. It often employs overly optimistic language, selective disclosure, and techniques of concealment and attribution [30,49]. According to [62], non-financial reporting is frequently used for greenwashing, driven by strategic or symbolic approaches [63]. When managers selectively present information to shape how readers perceive the company’s accomplishments, this is referred to as impression management in corporate reporting [64]. More broadly, “organizational impression management” describes efforts by companies to influence how others perceive them [65] actively. From this perspective, greenwashing is considered an inauthentic form of corporate behavior related to sustainability activities [66].

Corporate greenwashing often involves controlling both the content and presentation of disclosures, such as the amount of information shared, the topics emphasized, the attribution of responsibility, and the use of language, tone, and visual elements [64,67]. For example, Ref. [49] highlights that management may use thematic manipulation to emphasize positive news or rhetorical techniques to obscure negative information.

Previous research has shown that corporate reports are often used as tools for impression management, enabling companies to shape how readers perceive them [49,68]. This can help avoid transparency and gain legitimacy [62]. Impression management is especially common in narrative disclosures, which are less regulated [69] and not tightly linked to financial data [64]. In contrast, it tends to be less prevalent in mandated disclosures and in environmentally sensitive industries, where stakeholders pay closer attention to sustainability claims [36].

Compared to financial reports, sustainability reports are less standardized and subject to lower levels of regulation and assurance, making them more vulnerable to greenwashing. Some scholars argue that managers intentionally craft narrative disclosures to influence stakeholder perceptions and decision-making [49,50,70,71], thereby persuading organizational audiences to accept their version of reality [45]. For example, [72] found that tone management can raise shareholder expectations, but overly optimistic statements may lead to disappointment over time. Similarly, [73] demonstrated that managers frequently employ positive language to influence investor perception, which can lead to earnings manipulation.

2.2. Impression Management Strategies and Techniques

According to [67,74], the impression management strategies can be grouped into two main categories: concealment (hiding or omitting information) and attribution (shifting responsibility or framing outcomes). The authors of [23] further distinguish between assertive tactics—such as self-promotion, exemplification, and enhancement—and defensive tactics, like omission, disassociation, and concealment, which are used by both private and public sector organizations.

Researchers have applied multiple methods to study impression management [24,25,64,75], including the following:

• Syntactical analysis, which examines the complexity and structure of language used in reports;
• Performance comparison, where companies are benchmarked against standards that present them in a favorable light;
• Form-oriented analysis, which looks at the use of visuals such as graphs and images in corporate reporting;
• Rhetorical manipulation, which focuses on how language choices influence meaning and perception.

To protect their image, companies often employ text manipulation techniques in their reports, such as creating reading difficulties and adopting an optimistic tone, to conceal adverse outcomes and highlight positive ones [76]. Tone, as a rhetorical device, plays a significant role in shaping perceptions [50]. Ref. [77] found that companies with weaker sustainability performance tend to produce vague reports with less detailed information, employing strategies such as reducing the quantity of disclosure, lowering the readability, and manipulating themes and tone to manage impressions.

Studies of annual report narratives reveal that companies employ specific language features to influence stakeholder perceptions positively, or, as [78] describes, to conceal financial realities through strategic wording. Verbal strategies often involve attributing positive outcomes to the company’s actions, while blaming negative results on external factors or random events [26].

For users of corporate information, the ability to critically evaluate the tone and language of disclosures is essential. It helps distinguish between genuinely optimistic reporting and cases where tone is manipulated to create a misleadingly positive image [33]. Additionally, impression management in sustainability reporting can include visual elements such as graphs, photos, and illustrations [23,71]. A newer tactic, known as “organized hypocrisy,” involves misleading communication that presents a false image of sustainability efforts [71]. Because many social and environmental issues are challenging to quantify, narratives play a central role in shaping how companies communicate their sustainability performance.

To understand the link between corporate disclosure and actual performance, it is essential to consider not just the amount and content of information shared, but also the verbal tone and language used. These elements can either build trust or create skepticism among stakeholders. Ref. [79] argued that when companies present their motives purely as profit-driven, it can lead to perceptions of insincerity and greenwashing—a view supported by [80]. Misleading communication can create overly optimistic impressions, making it hard for stakeholders to distinguish genuine efforts from strategic rhetoric.

The way environmental initiatives are presented in management reports is crucial to establishing credibility and trust. Using overly optimistic language can backfire [81], especially when actual performance does not match the optimistic tone, leading to stakeholder skepticism and loss of trust. This is particularly relevant in sustainability reporting, where awareness of greenwashing is growing.

Ref. [82] noted that a negative tone tends to have a broader impact, while [49] found that worse-performing companies often use more optimistic and less specific language than better-performing ones. Ref. [50] linked tone to readability, and [83] observed that companies may reduce readability to hide negative information. Ref. [84] emphasized that less readable reports can mask poor future sustainability performance. In contrast, companies with strong sustainability performance are more likely to be transparent and less likely to manipulate their disclosures [85]. Ref. [86] highlighted that tone can signal either transparency or strategic optimism, which is central to detecting greenwashing.

Ref. [50] pointed out that excessive wordiness, technical jargon, long sentences, and inaccessible writing styles can reduce readability and be perceived as greenwashing. According to [50], report preparers may worry that deviating too far from standard formats could seem unprofessional or insincere. Therefore, it is essential to examine how language is used in sustainability reports to shape perceptions and influence behavior. Long-term analysis of disclosures is also crucial [87]. It is reasonable to assume that sustainability reports may be overly optimistic if they only highlight positive aspects while ignoring challenges, costs, or issues—especially when the goal is to greenwash rather than disclose.

2.3. Tools and Variables for Textual Analysis of Impression Management in Corporate Disclosures

Various content analysis tools, methods, and variables are used to investigate impression management through tone and other linguistic features in corporate disclosure. These include natural language processing (NLP) techniques [88], Latent Dirichlet Allocation (LDA) for topic modeling [77], lexical and quality analysis of the text [63], and the bag-of-words approach using CFIE software [46]. Other methods include rhetorical and textual analysis [89], as well as linguistic style or content analysis [41,42,44,53,54,76,90]. Some studies also calculate specific indices, such as tone [33] and managerial tone [89]. Ref. [91] noted that researchers often use keyword-based approaches to identify sustainability-related content and create word lists to analyze tone. For example, Ref. [37] developed six-word lists (negative, positive, uncertain, litigious, strong modal, and weak modal) to measure a document’s tone. The authors of [92] used a dictionary-based method to assess tone, while [33,46,84,93] applied [82]’s word list to detect patterns of positivity and negativity. However, these word lists are typically derived from a financial reporting context and may not fully capture the range of positive and negative expressions found in sustainability reports.

Research on impression management—especially in relation to disclosure tone—is conducted using a variety of tools. One of the most widely used is the content analysis software DICTION 6.0, although the variables studied often differ depending on the research objectives. For example, Ref. [49] calculated “optimism” and “certainty” scores in corporate disclosures and compared them with environmental performance ratings from KLD Research and Associates, Inc.’s. Ref. [50] focused on the use of a positive tone in disclosures, analyzing five master variables of verbal tone: activity, optimism, certainty, realism, and commonality. Ref. [30] examined optimism in sustainability reports by evaluating six specific linguistic strategies. Ref. [36] assessed optimism, realism, and certainty measures along with the overall size of disclosure (measured by word count). Meanwhile, Ref. [51] measured transparency signaling in CSR reports across three dimensions: participation, substantial information, and accountability.

Another widely used tool in impression management research is Linguistic Inquiry Word Count (LIWC) 2015 software. LIWC analyzes text and generates around 90 output variables for each input file. These include general descriptors (e.g., words per sentence), standard linguistic features (e.g., percentage of auxiliary verbs), and categories that reflect psychological constructs (e.g., emotional tone or affect). This makes LIWC particularly useful for identifying subtle patterns in language that may indicate impression management or greenwashing in corporate disclosures.

The LIWC software has been widely used in previous studies to analyze impression management in corporate disclosures. For example, Ref. [52] applied LIWC to 135 sustainability reports from large companies (1995–2014), focusing on the analytical thinking and authenticity dimensions. Ref. [42] examined the use of big words and emotional terms in the narrative disclosures of 64 Australian manufacturing firms. Ref. [90] analyzed morphological, syntactic, semantic, and pragmatic features in the CSR reports from the 15 largest carmakers. Several studies focused on four LIWC dimensions: analytical thinking, clout, authenticity, and tone. Examples include [53], who assessed five years of Cargill’s sustainability reports; Ref. [54], who analyzed online customer reviews in the service sector; and [38], who investigated 10-K filings in business-to-business contexts. However, most previous research has focused on a limited set of linguistic features, specific industries, or individual companies. Among the reviewed studies, only [38] conducted a longitudinal analysis over an extended period (24 years), while others covered much shorter time frames.

3. Research Methodology

3.1. Research Hypothesis and Analytical Strategy

The analytical framework of this study is grounded in insights derived from a comprehensive literature review. Our findings underscore that greenwashing within corporate reports can be effectively examined through impression management analysis. In contrast to previous studies, which have predominantly focused on impression management within a single type of report [25,94], the current study analyses and compares two types of reports—sustainability reports and management reports—to assess the impression management gap using the same set of impression management dimensions: tone, analytical thinking, clout, and authenticity (see the next section for a more detailed description). As the primary aim of this study is to explore greenwashing in sustainability reports, management reports are employed as a benchmark. Our approach measures the extent to which sustainability reports differ from what we assume to be a more neutral, factual language typically found in audited management reports [95]. Previous studies have demonstrated that impression management can occur even in management reports, for example, through selective narrative framing, emphasis on favorable outcomes, or omission of negative information [75,94]. However, such practices are expected to be less prevalent and less intense in management reports due to several factors: the presence of statutory audits, the longer history and institutionalization of financial reporting, and the pressure from stakeholders and regulators that discourages overt manipulation of reported information. In contrast, sustainability reports are less frequently subject to external assurance [96], particularly when such assurance is voluntary rather than mandatory, leaving them more susceptible to impression management and greenwashing.

To calculate the impression management gap, we selected two types of corporate reports that are long and rich in textual content, allowing us to capture company-specific jargon. Financial reports were excluded because they contain limited narrative text, and governance reports were too templated and standardized for meaningful analysis. Management reports were chosen because they are both textual and audited.

By comparing these two types of reports, we can account for differences in corporate communication styles across companies and industries [25,97]. This approach helps identify exaggerations and overly optimistic language in sustainability disclosures, allowing us to detect potential greenwashing.

H1. 

There is a significant impression management gap between sustainability and management reports.

The literature review also revealed that the industry plays a crucial role in the quantity and quality of disclosure [98]; thus, greenwashing and impression management practices are industry-specific [53,99,100]. Building on this, our study aims to investigate indications of greenwashing across industries by examining how industry-specific tendencies influence the extent and nature of impression management in both sustainability and management reports. Different industries face varying levels of regulatory requirements and supervision, communication norms, and sustainability challenges, all of which can shape how companies report their efforts.

H2. 

The impression management gap between sustainability and management reports is industry-specific.

Previous research [38,52,53] has shown changes in corporate reports over time, indicating companies’ willingness to reflect broader societal trends. Moreover, corporate practices to disclose sustainability information have evolved; some countries (for example, Italy and Spain) have adopted assurance requirements, and stakeholder pressure for prioritization of assurance-related factors [100] has emerged. We argue that increased regulation should reduce greenwashing. As stated by [101], regulatory guidelines are the slow end of the “self-regulation” era and the transition to harmonizing sustainable practices. We argue that not only the adoption of NFRD but also the introduction of CSRD could lead to anticipatory corporate behavior, as companies can analyze CSRD requirements and gradually start making changes before they come into force. The current study conducts a longitudinal analysis to track changes over time and assess the long-term effects of the variables being studied. Specifically, it examines how impression management techniques in sustainability reports have evolved in response to increasing EU-wide regulatory requirements. By gathering data over multiple years, this research aims to determine whether these regulatory changes have influenced the strategies companies use to present their sustainability efforts, offering insights into the broader impact of regulation on corporate transparency.

H3. 

The impression management gap between sustainability and management reports is decreasing over time.

The analytical strategy of the current study is structured as follows: firstly, textual dimension analysis is performed. We begin by calculating the textual dimensions of sustainability and management reports for each year, followed by computing the average across the entire period. Secondly, the impression management gap is calculated. For each year, we calculate the impression management gap and compute the average across the study period. At this step, we test hypothesis H1. It is expected that, compared to management reports, sustainability reports should be overly optimistic, reflecting the positive tone of the impression management gap. The use of impression management techniques and (over)confidence in sustainability reports can be inferred from the positive value of the clout in the impression management gap. Since analytical thinking and authenticity are indirectly related to greenwashing and are associated with the disclosure of analytical, truthful, and trustworthy information, it is expected that these dimensions would be similar in both reports; therefore, the impression management gap scores should be close to zero. We accept hypothesis H1 if the impression management gap is significant and positive for tone and clout, and significant but negative for the analytical thinking and authenticity dimensions. Otherwise, the hypothesis is rejected. To test hypothesis H1, we first performed the Shapiro–Wilk test for normality. As one of the dimensions (analytical thinking) failed the normality test, we ran the Wilcoxon signed-rank test, a non-parametric alternative to the paired t-test, to determine whether the average difference (gap) between the sustainability reports and their corresponding management reports is statistically significant. This test is robust to non-normality and outliers and tests median differences instead of means, which may better reflect the “typical” gap if extreme values exist. In testing hypothesis H1, a threshold of α = 0.05 was adopted to determine statistical significance. Results with p < 0.05 were considered statistically significant, indicating sufficient evidence to reject the null hypothesis and accept that a meaningful difference exists between the paired exact dimensions of sustainability and management reports from the same year/company. Conversely, results with p ≥ 0.05 were interpreted as not statistically significant, implying that the observed differences could be attributed to random variation rather than a systematic effect. Fourthly, we perform sector-based analysis of textual dimensions and calculate sectoral impression management gaps. At this stage, we group the data and perform analysis by sector, aiming to identify variations in textual dimensions among companies within the same industry. At this step, we test hypothesis H2. To accept hypothesis H2, the scores of the impression management dimensions must vary within a relatively small range across the same industry. We accept hypothesis H2 if the impression gap in the same sector is positive for tone and clout and negative for analytical thinking and authenticity. Otherwise, hypothesis H2 is rejected. Fifthly, longitudinal analysis is performed. We calculate and examine longitudinal changes in both impression management dimensions and the impression management gap, with a sectoral focus. At this step, we test hypothesis H3. We accept hypothesis H3 if the impression management gaps across examined dimensions are decreasing. Otherwise, hypothesis H3 is rejected. Lastly, conclusions are drawn regarding the likelihood of greenwashing in sustainability reports, its significance, and its evolution over time.

3.2. Research Methods and Variables

The current study employs the content and textual analysis method of corporate reports, a proven, sound, and reliable approach for identifying greenwashing in corporate reporting [25]. In previous research, the measurement of impression management has commonly been investigated through manual [25,97] or automated content analysis [94,102], with some scholars using a combination of both [64,75]. For the textual analysis of sustainability and management reports, we have chosen to use automated text analysis software LIWC-22 (Linguistic Inquiry and Word Count), aiming to ensure theoretical soundness, efficiently handle large volumes of reports, and generate comparable findings of changes in corporate communication over time. Studies [25,103] applying LIWC to sustainability reports have found that companies with more decoupled or unreliable sustainability claims tend to use less complex and less authentic language, with lower analytical scores, reflecting possible strategic obfuscation of greenwashing behaviors.

The current study measured four impression management dimensions that are opaque to application users and are therefore referred to as “summary language variables” (ranging from 0 to 100):

• Tone (T)—assesses the overall positivity of a report’s language [104]. It combines both positive and negative emotional expression into a single variable [54]. Scores below 50 indicate a negative tone (e.g., anxiety, sadness, and hostility), while scores above 50 reflect a positive tone [104]. Optimistic language often highlights positive aspects, whereas disclosure of negative aspects suggests greater transparency [105]. A more negative tone is associated with higher disclosure quality, while a more positive tone may signal lower quality and potential greenwashing. The tone score ranges from 0 to 100; below 50 it indicates an (over)negative tone, 50 is neutral, and above 50 is an (overly) positive tone. Scores between 50 and 75 suggest moderate impression management, while scores above 75 indicate elevated impression management, both of which are commonly associated with greenwashing.
• Analytical thinking (AN)—also known as analytical thinking, measures the degree of logical and formal language use [54]. It reflects the extent to which individuals apply structured, hierarchical thought patterns [104]. According to post-emotional theory, emotion increasingly replaces reason in persuasive communication [38]. To gain social legitimacy, emotional appeals become normative, thereby reducing reliance on and the use of analytical language. A lower analytical thinking score may indicate reduced the reliability of disclosed information, while a higher score reflects greater cognitive complexity and sound reasoning [52]. Thus, higher analytical thinking scores may indirectly signal a lower likelihood of greenwashing.
• Clout (Cl)—measured the degree of confidence and authority in the report’s language, contrasting assertive communication with cautious or modest styles [104]. It reflects leadership and status-oriented language, with higher scores indicating confident, credible, and outward-focused communication [38]. Lower scores suggest tentativeness, humility, or anxiety. A higher clout score may signal more reliable disclosure, while lower scores may reflect uncertainty. This variable has an indirect link to greenwashing, as excessive confidence may mask selective or biased reporting.
• Authenticity (AU)—measures the perceived honesty and genuineness of the report’s language [104]. Higher scores indicate more personal, open, and honest communication, while lower scores suggest guarded, detached, or potentially deceptive language [52,54]. According to post-emotional theory, social actors gain legitimacy by expressing emotions that align with social norms, often prioritizing emotional appeal over rational argument [38]. As authenticity reflects reliability and transparency, its use is expected to increase over time. A higher authenticity score suggests more honest disclosure and is indirectly linked to reduced likelihood of greenwashing.

The selection of four LIWC dimensions—tone, analytical thinking, clout, and authenticity—as proxies for impression management and greenwashing is grounded in their relevance to corporate communication strategies. These dimensions capture key linguistic features that reflect emotional framing (tone), cognitive complexity (analytical thinking), confidence and authority (clout), and perceived honesty (authenticity). However, we acknowledge that specific dimensions, particularly clout, may comprise ambiguous interpretations. While a high clout score can indicate confident and credible communication, it may also mask selective disclosure or over-assertiveness, which complicates its role as a proxy for transparency. Therefore, we interpret clout in conjunction with other dimensions to mitigate ambiguity and strengthen the validity of our analysis.

The scores for all four impression management dimensions were calculated using LIWC software separately for the sustainability and management reports of each company. These scores are standardized as percentile scores. Descriptive statistics, including mean, minimum, maximum, and standard deviation, were computed for the full sample, as well as for industry and time-period subgroups.

While stand-alone reports capture a snapshot of current communication practices, detecting impression management requires examining changes over time. For the tone, an increase suggests a strengthening of impression management, whereas a decrease indicates a weakening of it. For the analytical thinking, clout, and authenticity dimensions, a decline over time is interpreted as a signal of increased impression management. In other words, decreasing values in these dimensions indicate a likelihood of greenwashing. Thus, temporal shifts rather than static values are key to identifying impression management techniques and potential greenwashing behavior.

To assess the presence of greenwashing in sustainability reports, the impression management gap (IMGi,t) at a given period t for a chosen dimension i was calculated as a difference between the impression management dimensions in sustainability reports and those in management reports. Specifically, IMGi,t is defined as

IMGi,t = IM_Si,t − IM_Mi,t

(1)

where

• IM_Si,t represents the impression management score for a given dimension i in the sustainability report at period t.
• IM_Mi,t represents the impression management score for the same dimension i in the management report at period t.

Similarly to the individual impression management scores, standard descriptive statistical measures—including the average, minimum, maximum, and standard deviation—were calculated and interpreted for IMGi,t across the entire sample as well as sub-samples from different industries and reporting periods.

By calculating this difference, the impression management gap captures the extent to which the language and framing in sustainability reports deviate from the more neutral and factual tone typically found in audited management reports. A positive value of IMGi,t suggests that the sustainability report exhibits a higher degree of impression management (acting as a proxy for greenwashing likelihood) compared to the management report. In contrast, a negative value indicates a more restrained or neutral tone in the sustainability report. A greater IMGi,t suggests a higher likelihood of greenwashing in the sustainability report.

The interpretation of the scores varies slightly depending on the specific dimension of impression management. A greater IMGi,t in tone indicates an over-positivity in sustainability reports compared to management reports, suggesting the presence of impression management, and, thus, the likelihood of greenwashing. The higher the score, the greater the level of greenwashing, hence the significance of greenwashing. A greater IMGi,t in the analytical thinking dimension suggests that sustainability reports are formal, with companies’ attempting to write only according to mandatory requirements, lacking company-specific content. A greater IMGi,t in the clout dimension shows overconfidence in sustainability reports compared to management ones, indicating that companies do not use words with so much care. A greater IMGi,t in the authenticity dimension shows that companies do not have a consistent sustainability reporting style, and the information disclosed in reports is more related to presenting what happened that year, rather than the consistency of reports.

For a more robust interpretation of longitudinal changes in greenwashing likelihood, the following assumptions regarding the significance of the changes/differences in impression management gap scores across all impression management dimensions were made. A change below 10% (∆+/− < 10%) is interpreted as being justified and related to annual developments in sustainability regulations, learning practices, etc. Such changes were viewed as ordinary (insignificant), suggesting that the likelihood of greenwashing neither increased nor decreased compared to previous years. An increase or decrease in IMGi,t scores exceeding 100% (∆ > ±100%) is considered significant. Such cases can be viewed as red flags and deliberate corporate actions aimed at greenwashing (although further analysis of the reasons and circumstances is recommended) or, conversely, as efforts to eliminate it.

3.3. The Sample and Data

The current study examined corporate reports of companies listed on the Nasdaq OMX Baltic stock exchange. Nasdaq OMX Baltic represents a distinct region within the EU, encompassing the relatively small, open economies of Estonia, Latvia, and Lithuania. These countries share similar economic structures, regulatory environments, and corporate governance practices, making them a coherent and meaningful case study. Their early adoption of EU sustainability and transparency regulation further enhances their relevance for examining disclosure practices. Although the findings are regionally focused, they offer insights into how companies in smaller EU economies respond to sustainability reporting pressures, which may be indicative of broader trends among emerging markets or other relatively small EU economies, such as Slovenia, Slovakia, and Croatia—countries with a similar socio-economic environment, and that are also EU member states. Our methodology can also be applied to a single country, region, or the entire EU.

The initial data sample included all 35 companies listed on the Main List of Nasdaq OMX Baltic. However, the sample was purposively refined based on several criteria. First, both sustainability and management reports had to be available in a format readable by the LIWC software for the research period from 2020 to 2023. This period was intentionally selected to reflect the first wave of sustainability reporting regulations under the NFRD, which came into effect in 2020. Additionally, reporting format restrictions had to be addressed, as earlier sustainability and management reports were often scanned PDFs or otherwise unsuitable for conversion into digital, machine-readable files for analysis using LIWC-22 software (version 1.10.0). A few companies (mainly from the manufacturing or apparel sector) provided sustainability reports for a shorter period. The adoption of the European Single Electronic Format (ESEF) also introduced constraints, since it primarily applies to financial data and often excludes extractable management and sustainability information. Finally, only reports published in English were included to avoid translation issues and ensure consistency and comparability across documents. Due to the restrictions, 11 companies were excluded (3 due to ESEF, 3 due to shorter reporting periods, 5 due to missing separate sustainability reports) from the research sample, leaving a final dataset of 24 companies and 192 reports (four management reports and four sustainability reports per company) for analysis.

The sample companies (see

Table 1. Sample companies.

No.	Company	Country	Core Business	Sector
1.	AS Arco Vara	Estonia	Property development	Services
2.	Coop Pank AS	Estonia	Banking
3.	AS DelfinGroup	Latvia	Financial services
4.	EfTEN Real Estate Fund AS	Estonia	Real estate investments (real estate fund)
5.	Eleving Group S.A.	Latvia	Financial services
6.	AS LHV Group	Estonia	Holding company, financial group and capital provider
7.	AB Novaturas	Lithuania	Tour operator
8.	AS Tallink Grupp	Estonia	Maritime transportation
9.	AS Tallinna Sadam	Estonia	Port services
10.	Šiaulių bankas AB	Lithuania	Banking activities
11.	Telia Lietuva, AB	Lithuania	Telecommunications
12.	Enefit Green AS	Estonia	Renewable energy generation	Utilities
13.	AB “Ignitis Grupė”	Lithuania	A renewables-focused integrated utility
14.	AB KN Energies	Lithuania	Operation/management of liquids and liquefied natural gas terminals
15.	AS Tallina Vesi	Estonia	Water supply, wastewater collection, and treatment services
16.	Grigeo Group AB	Lithuania	Production of sanitary and household paper products	Manufacturing
17.	AS Harju Elekter Group	Estonia	Developing and manufacturing power distribution and automation solutions
18.	AS PRFoods	Estonia	The production and sales of fish products
19.	AS Silvano Fashion Group	Estonia	Production and sale of women’s lingerie
20.	AUGA group, AB	Lithuania	Farming	Residual
21.	AS Merko Ehitus	Estonia	Construction (main contractor) and real estate development
22.	Nordecon AS	Estonia	Construction and engineering
23.	AB Akola Group	Lithuania	Agribusiness and food production
24.	TKM Grupp AS	Estonia	Wholesale and resale of goods

Source: own elaboration.

) represent various countries and sectors, with a notable presence of service and utility companies. This dataset can be considered representative, as relatively small sample sizes are standard in impression management research [24,75]. To investigate whether greenwashing is sector-specific, companies were grouped by sector according to their core business activities. Not all sectors could be represented equally due to sample limitations; therefore, for sectoral analysis, four sectors were selected: services, utilities, manufacturing, and “residual” (including companies from industries with fewer than four representatives in the sample).

4. Results

Data analysis using LIWC software indicated that a typical sustainability report from a company listed on the Main List of Nasdaq OMX Baltic consists, on average, of 32 pages and 13,450 words, and is generally analytical, authentic, and written with assurance and objectivity. In comparison, a typical management report typically consists of 27 pages and 12,232 words, and also exhibits analytical and authentic language, with a confident tone.

Table 2. Impression management dimensions of sustainability and management reports.

	Sustainability Report				Management Report
	T	AN	CL	AU	T	AN	CL	AU
2020	51.2	95.6	70.4	20.0	37.8	98.0	53.9	20.2
2021	48.0	95.8	67.7	18.9	37.0	97.9	53.9	20.9
2022	50.2	96.0	67.0	17.6	36.2	98.0	52.2	21.4
2023	48.9	96.3	64.7	17.1	35.6	98.1	52.6	19.3
Average	49.6	95.9	67.5	18.4	36.7	98.0	53.2	20.4
Standard deviation	12.0	2.5	12.0	6.2	11.1	1.0	11.7	8.6
Min	17.4	88.8	46.7	2.4	19.0	94.7	37.6	5.1
Max	82.0	99.0	93.9	40.8	70.3	99.0	84.9	43.3

Source: own elaboration.

summarizes the scores of four impression management dimensions for both sustainability and management reports, which have been calculated by LIWC software. Descriptive statistics (minimum, maximum, average, and standard deviation) were calculated for all reports in the sample, revealing notable differences across companies.

As shown in Table 2, management reports were more analytical and authentic, written with less confidence, and exhibited a more negative tone compared to sustainability reports. When analyzing shifts in impression management dimensions, including sustainability and management reports, it was notable that the clout and authenticity scores of these reports declined over time, indicating a rise in the likelihood of using impression management techniques. The analytical thinking scores of sustainability reports increased during the analyzed period, indicating a decrease in the possibility of impression management and thus greenwashing. Meanwhile, the analytical thinking scores of management reports remained stable, varying by just 0.2 points (from 97.9 to 98.1). The tone of sustainability and management reports declined, indicating a decrease in the likelihood of impression management and thus greenwashing.

The next step in our analysis involved calculating the impression management gap, which captures the extent to which the impression management dimensions in sustainability reports deviate from the more neutral and factual tone typically expected in audited management reports. Descriptive statistics (min, max, average, and standard deviation) of the impression management gap were calculated for all reports within the sample (see

Table 3. Impression management gap (IMG) scores across the sample.

	IMG Scores
	T	AN	CL	AU
2020	13.4	−2.4	16.6	−0.3
2021	11.0	−2.1	13.8	−2.0
2022	14.0	−2.0	14.8	−3.7
2023	13.3	−1.8	12.1	−2.2
Average	13.0	−2.1	14.3	−2.0
Standard deviation	15.5	2.7	14.1	9.6
Min	−29.5	−9.7	−16.6	−23.6
Max	54.1	2.4	43.9	19.7

Source: own elaboration.

), revealing significant differences among companies.

As shown in Table 3, the tone (IMG_T) and the clout (IMG_CL) scores indicate a likelihood of greenwashing in sustainability reports. The values of the IMG_CL decreased over the research period (from 16.6 to 12.1); meanwhile, the IMG_T fluctuated over time. The negative values of the analytical thinking (IMG_AN) and the authenticity (IMG_AU) scores indicated that sustainability reports were more restrained. Descriptive statistics for the impression management gap revealed disparities among companies, as IMG_T varied from −29.5 to 54.1, IMG_AN varied from −9.7 to 2.4, IMG_CL varied from −16.6 to 43.9, and the IMG_AU varied from −23.6 to 19.7.

For the testing of hypothesis H1, we first ran the Shapiro–Wilk test (see

Table 4. Normality Test (Shapiro–Wilk).

		W	p
Tone SR	Tone MR	0.993	0.897
Analytical Thinking SR	Analytical Thinking MR	0.902	<0.001
Clout SR	Clout MR	0.986	0.410
Authenticity SR	Authenticity MR	0.986	0.429

Source: own elaboration.

). If p < 0.05, normality is violated.

As shown in Table 4, tone SR-MR, clout SR-MR, and authenticity SR-MR pairs are normally distributed, but since analytical thinking SR-MR violates normality (p < 0.01), a non-parametric test, the Wilcoxon, was chosen for the paired t-test.

As shown in

Table 5. Wilcoxon signed-rank test.

		p	Mean Difference	SE Difference
Tone SR	Tone MR	<0.001	12.93	1.587
Analytical Thinking SR	Analytical Thinking MR	<0.001	−1.70	0.279
Clout SR	Clout MR	<0.001	14.08	1.438
Authenticity SR	Authenticity MR	0.061	−1.96	0.982

Note. H_a μMeasure 1—Measure 2 ≠ 0. Source: own elaboration.

, the comparisons between sustainability reports (SRs) and management reports (MRs) show significant differences in tone, analytical thinking, and clout, as all values are less than 0.001. Tone and clout are higher in sustainability reports, with mean differences of 12.93 and 14.08, respectively, indicating stronger expression in these dimensions. Analytical thinking scores are slightly lower in sustainability reports, with a mean difference of −1.70, and this difference is statistically significant. Authenticity, however, does not differ significantly between the two report types, with a p-value of 0.061, slightly above the conventional 0.05 threshold. Overall, sustainability reports tend to exhibit higher tone and clout scores, slightly lower analytical thinking scores, and comparable levels of authenticity relative to management reports.

The Wilcoxon signed-rank test revealed statistically significant differences in tone, analytical thinking, and clout scores between sustainability and management reports (p < 0.01), supporting the hypothesis that there is a pronounced impression management gap between sustainability and management reports. However, the difference in authenticity scores did not reach significance (p = 0.061), and thus the null hypothesis could not be rejected. We accept hypothesis H1 for the tone, analytical thinking, and clout dimensions, and reject it for the authenticity dimension.

To investigate whether impression management in sustainability reporting is industry-specific, impression management dimensions in sustainability and management reports (see

Table 6. Impression management dimensions across sectors.

Sector	Year	Sustainability Report				Management Report
		T	AN	CL	AU	T	AN	CL	AU
Services	2020	51.3	93.3	74.0	20.7	37.0	98.3	55.0	17.7
	2021	49.5	94.9	70.8	21.6	37.1	98.0	55.3	18.9
	2022	52.5	95.5	71.5	18.8	39.0	97.8	54.8	21.5
	2023	52.4	95.9	69.9	19.6	38.3	97.9	57.0	19.4
	Average	51.4	94.9	71.6	20.2	37.9	98.0	55.5	19.4
Utilities	2020	50.3	97.0	69.8	19.1	42.8	97.3	58.6	19.4
	2021	48.2	97.3	70.1	17.3	46.4	97.5	60.0	22.8
	2022	45.1	97.1	63.3	19.0	42.5	98.1	55.8	23.4
	2023	39.8	97.1	56.3	15.4	37.8	98.1	47.3	17.7
	Average	45.9	97.1	64.9	17.7	42.4	97.7	55.4	20.8
Manufacturing	2020	43.7	98.6	63.7	18.7	32.8	98.7	50.5	15.0
	2021	42.2	96.9	62.4	14.6	30.2	98.6	49.0	15.7
	2022	43.0	96.8	63.5	13.7	27.6	98.6	50.0	13.1
	2023	44.8	96.6	61.9	13.4	30.4	98.5	52.7	12.8
	Average	43.4	97.2	62.8	15.1	30.2	98.6	50.5	14.2
Residual	2020	57.7	97.2	68.5	20.2	39.3	97.5	50.3	30.6
	2021	49.5	95.9	63.3	17.7	34.8	97.7	50.2	27.8
	2022	55.2	95.9	62.7	17.2	31.9	98.1	45.5	26.1
	2023	52.0	96.2	62.1	16.0	32.1	98.1	47.3	25.5
	Average	53.6	96.3	64.1	17.8	34.5	97.8	48.3	27.5
Sample average		49.6	95.9	67.5	18.4	36.7	98.0	53.2	20.4

Source: own elaboration.

) and the impression management gap across sectors (see

Table 7. Impression management gap (IMG) scores across sectors.

Sector	Year	IMG Scores
		T	AN	CL	AU
Services	2020	14.3	−5.0	19.0	3.0
	2021	12.4	−3.1	15.5	2.7
	2022	13.5	−2.3	16.7	−2.7
	2023	14.1	−2.0	12.9	0.2
	Average	13.5	−3.1	16.1	0.8
Utilities	2020	7.5	−0.3	11.2	−0.3
	2021	1.8	−0.2	10.1	−5.5
	2022	2.6	−1.0	7.5	−4.4
	2023	2.0	−1.0	9.0	−2.3
	Average	3.5	−0.6	9.5	−3.2
Manufacturing	2020	10.9	−0.1	13.2	3.7
	2021	12.0	−1.7	13.4	−1.1
	2022	15.4	−1.8	13.5	0.6
	2023	14.4	−1.9	9.2	0.6
	Average	13.1	−1.4	12.3	0.9
Residual	2020	18.4	−0.3	18.2	−10.4
	2021	14.7	−1.8	13.1	−10.1
	2022	23.3	−2.2	17.2	−8.9
	2023	19.9	−1.9	14.8	−9.5
Average		19.1	−1.5	15.8	−9.7
Sample average		13.0	−2.1	14.3	−2.0

Source: own elaboration.

) were calculated.

Table 6 indicates considerable disparities across the impression management dimensions of corporate reports within sectors. The tone scores of sustainability reports in the manufacturing sector were below the sample average value for the whole period (varying from 42.2 in 2021 to 44.8 in 2023). In comparison, the highest values of the tone scores were observed in the services sector and the residual sector, exceeding the sample average (varying from 49.5 in 2021 to 52.5 in 2022 in the services sector and from 49.5 in 2021 to 57.7 in 2020 in the residual sector). Moreover, the tone scores of sustainability reports across all sectors exceeded the values of the same dimension in management reports, indicating a more positive tone in sustainability reports. Substantial disparities in the analytic scores across the sectors were also evident. The lowest values were observed in the services sector, while the highest were in the utilities sector across all time frames. The highest values of the tone and the lowest values of authenticity in the services sector may indicate a likelihood of greenwashing. The clout of sustainability reports of companies operating in the manufacturing and residual sectors was below the average value for almost the entire period (varying from 13.4 in the manufacturing sector in 2023 to 20.2 in the residual sector in 2020). Only the authenticity of management reports from companies in the residual and utilities sectors exceeded the values of sustainability reports, with some exceptions in certain years. Additionally, significant disparities existed across sectors, with the lowest values observed in the manufacturing sector and the highest in the services sector. To further explore the impression management and likelihood of greenwashing across sectors, the impression management gap was calculated for all four impression management dimensions and presented in Table 7.

As shown in Table 7, considerable disparities existed across the impression management gap within the sectors. The highest values of the IMG_T were found in the residual (19.1 on average), services (13.5 on average), and manufacturing (13.1 on average) sectors. In contrast, the lowest values were in the utilities (3.5 on average) sector. The highest values of IMG_CL were found in the residual (15.8 on average), services (12.9 on average), and manufacturing (12.3 on average) sectors. In contrast, the lowest values were in the utilities (9.5 on average) sector. The highest difference in IMGAN was found in the services (−3.1 on average), residual (−1.5 on average), and manufacturing (−1.4 on average) sectors, while the smallest was in the utilities sector (−0.3 on average). Moreover, analyzing the impression management gap within the sectors on a year-by-year basis reveals the existence of volatility. For example, IMG_T in the services sector decreased until 2021, indicating a decrease in the likelihood of greenwashing; however, the year after, this gap increased. The IMG_AU indicated twofold results. Firstly, significant disparities existed between the sectors; only in the utilities and residual sectors, this gap indicated the likelihood of greenwashing. Secondly, the volatility of IMG_AU existed in other sectors, varying on a year-by-year basis. For example, in the services sector, IMG_AU was positive (2.7 in 2021) and then went in the opposite direction the following year (−2.7 in 2022). These fluctuations suggest that authenticity in corporate reporting is not uniformly applied across industries or time periods. Rather than dismissing these inconsistencies, they highlight the complexity of impression management and the contextual nature of authenticity.

Authenticity, as measured by LIWC, captures the degree of openness and honesty in language. However, its interpretation can vary depending on industry norms, stakeholder expectations, and the nature of disclosed information. For instance, sectors like utilities may face more scrutiny and thus adopt more cautious or strategic language, while services may experience greater variability due to diverse business models and disclosure practices.

The observed volatility of IMG_AU underscores the need for sector-specific and longitudinal tracking. It also suggests that authenticity alone may not serve as a universally stable proxy for greenwashing. Instead, it should be interpreted in conjunction with other dimensions (e.g., tone or clout) and contextual factors. This nuanced approach strengthens the reliability of the impression management gap as an indicator of greenwashing tendencies.

The impression management gap analysis across sectors revealed that greenwashing can be indicated through tone, analytical thinking, and clout impression management gap dimensions; however, further study is needed to assess authenticity. As the tone and clout of the impression management gap were positive, and the analytical thinking of the impression management gap was negative for every year and on average for the entire period, while the authenticity of the impression management gap showed twofold results, we accept hypothesis H2, except for the authenticity in the services and manufacturing sectors.

As the impression management gap was inconsistent from year to year and within sectors, further analysis was performed. The changes in the impression management gap were calculated and presented in

Table 8. Longitudinal changes in textual dimensions and the impression management gap (IMG) scores across sectors.

	IMG Scores
	T	AN	CL	AU
Overall (∆2020–2023)	−0.7%	−25.0%	−27.1%	633.3%
Services	−1.4%	−60.0%	−32.1%	−93.3%
Utilities	−73.3%	233.3%	−19.6%	666.7%
Manufacturing	32.1%	1800.0%	−30.3%	−83.8%
Residual	8.2%	533.3%	−18.7%	−8.7%
∆2020–2021	−17.9%	−12.5%	−16.9%	566.7%
Services	−13.3%	−38.0%	−18.4%	−10.0%
Utilities	−76.0%	−33.3%	−9.8%	1733.3%
Manufacturing	10.1%	1600.0%	1.5%	−129.7%
Residual	−20.1%	500.0%	−28.0%	−2.9%
∆2021–2022	27.3%	−4.8%	7.2%	85.0%
Services	8.9%	−25.8%	7.7%	−200.0%
Utilities	44.4%	400.0%	−25.7%	−20.0%
Manufacturing	28.3%	5.9%	0.7%	−154.5%
Residual	58.5%	22.2%	31.3%	−11.9%
∆2022–2023	−5.0%	−10.0%	−18.2%	−40.5%
Services	4.4%	−13.0%	−22.8%	−107.4%
Utilities	−23.1%	0.0%	20.0%	−47.7%
Manufacturing	−6.5%	5.6%	−31.9%	0.0%
Residual	−14.6%	−13.6%	−14.0%	6.7%

Source: own elaboration.

.

Several trends emerged from the longitudinal analysis of impression management gap scores across textual dimensions, as presented in Table 8. Overall, tone, analytical thinking, and clout show a decreasing trend in impression management, which may suggest a reduction in greenwashing practices. In contrast, authenticity reveals an increasing gap—rising by 633.3 percent—indicating a potential deterioration in the honesty or transparency of sustainability disclosures.

However, these findings also reveal considerable volatility across years and sectors. For example, the IMG_T decreased by 17.9 percent from 2020 to 2021, but increased by 27.3 percent in the following year. Similarly, IMG_AU rose by 566.7 percent between 2020 and 2021, then dropped by 40.5 percent from 2022 to 2023. This instability may reflect emerging and evolving reporting practices, but it could also suggest that the impression management gap is sensitive to contextual factors or that the measure itself may be noisy or unstable.

Rather than interpreting fluctuations solely as signs of emerging practices, alternative explanations must be considered. Different industries have distinct reporting cultures and stakeholder expectations. Moreover, corporate reports may be written by different teams or external consultants over the years. Shifts in authorship, tone, or editorial strategy can significantly impact linguistic patterns, particularly in terms of authenticity and clout, which are sensitive to writing style and narrative framing. In addition, companies may adjust their communication strategies in response to external pressures. A sudden increase or decrease in impression management scores could reflect a deliberate shift in how companies present themselves, rather than a stable trend. Moreover, LIWC dimensions are derived from word-level analysis and can be sensitive to small changes in phrasing or document structure. This can introduce measurement noise, especially in shorter or less standardized reports, which can affect year-to-year consistency.

The analysis revealed considerable sectoral differences in impression management gap scores. For instance, the IMG_T in the manufacturing sector increased by 32.1 percent over the 2020–2023 period, suggesting a growing divergence between management and sustainability reports and a potential rise in greenwashing practices. In contrast, the utilities sector showed a 73.3 percent decrease in IMG_T, which may indicate a narrowing gap in reporting. However, interpreting this as a lower likelihood of greenwashing requires caution. The utilities sector is typically subject to strict regulatory oversight and intense public scrutiny, which may constrain impression management and lead to more standardized reporting. Therefore, the reduced gap may reflect compliance-driven consistency rather than genuine transparency.

Further, significant fluctuations were observed across all dimensions and sectors. For example, IMG_T scores in the utilities sector shifted from −76.0 percent (2020–2021) to +44.4 percent (2021–2022), while the manufacturing sector showed consistent increases in IMG_T across consecutive years. These patterns suggest that reporting practices are still evolving and may be influenced by external pressures, strategic shifts, or sector-specific norms. Extreme changes in IMG_AN and IMG_AU—such as a 1800.00 percent increase in IMG_AN in the manufacturing sector—should be interpreted as potential red flags, warranting closer scrutiny by stakeholders. Such volatility may lead to deliberate attempts to shape perceptions in response to shifting expectations, rather than stable improvements in disclosure quality.

Overall, the conducted analysis revealed that the textual dimensions of sustainability and management reports are inconsistent over the analyzed period, with a higher likelihood of impression management (and thus greenwashing) in sustainability reports than in management reports. Moreover, impression management practices are company- or industry-specific and do not exhibit any clear trends; therefore, further analysis is needed. This leads to a rejection of hypothesis H3.

5. Discussion

The detection of greenwashing in sustainability reports remains an unresolved issue, as it encompasses various levels, forms, and shades [14]. Detection and greenwashing measurement challenges are also caused by fragmented non-financial information [106], a lack of suitable data [107], the absence of a unified measurement system, and the absence of clear assurance regulation [100]. With the variety of companies from different sectors, each with distinct sustainability practices and communication styles, it is rather challenging to propose a methodology that can be used for longitudinal and cross-sector analysis. The current study proposes a novel approach for assessing greenwashing by building on impression management analysis methodology and conducting a comparative analysis of two types of corporate reports. A proposed approach to calculating the impression management gap between the impression management dimensions of sustainability and management reports (using the latter as a benchmark) allows for controlling company-specific reporting variables, such as corporate communication style. In addition, the paper also conceptualizes how different textual impression management dimensions should be interpreted in the light of greenwashing analysis.

Our study has conducted textual analysis of the four impression management dimensions (tone, clout, analytical thinking, and authenticity) and identified notable impression management gaps between sustainability and management reports, allowing us to conclude on the presence of greenwashing in sustainability reports among the companies listed on Nasdaq OMX Baltic over the 2020–2023 period. The proposed approach can be applied in various markets and industries, both for cross-sectional and longitudinal analyses.

Our study supported hypothesis H1 across tone, clout, and analytical thinking, but not authenticity. The descriptive analysis reveals notable differences in linguistic style between sustainability and management reports. The significant positive mean difference in tone indicates that sustainability reports employ a more positive and confident language than management reports, reflecting a strategic effort to present the organization in a favorable light and influence stakeholder perceptions. The significant positive mean difference in clout indicates that companies could use sustainability reports to project expertise and credibility through confident, emotionally expressive language, reflecting a narrative-driven approach to communication values and impact. In contrast, the significant negative difference in analyticity suggests that sustainability reports may prioritize persuasive or impression-oriented communication over structured and consistent style typical of management reports. Although management reports show slightly higher authenticity scores, the greater variability implies a broader range of organizational voice. The absence of significant differences in authenticity across report types may reflect strategic consistency in corporate disclosures, regulatory constraints that standardize transparency expectations, and industry-wide communication norms that promote a stable level of perceived honesty regardless of report type.

Similarly, hypothesis H2, was also supported for all impression management gap dimensions, except for authenticity. This suggests that while industries may vary in how they strategically shape the emotional, analytical, and authoritative aspects of their reporting, the level of authenticity remains relatively stable across sectors. The consistency in authenticity may reflect a shared normative expectation for transparency in corporate communication, regardless of industry.

However, hypothesis H3 was rejected. This can reflect a convergence in reporting practices and a reduction in greenwashing. However, the result diverged from this expectation, showing persistent and even widening gaps in some of the sectors; for example, manufacturing. Although overall changes indicated a decrease in impression management gap over time for tone, clout, and analytical thinking (but not authenticity), the significant fluctuations within years and sectors suggest that this does not reflect an actual decrease in the use of impression management, and thus greenwashing. This rejection indicates that impression management in sustainability reporting remains highly variable and context-dependent, rather than following a linear path toward greater transparency and reliability. One possible explanation is that companies are responding to increasing stakeholder scrutiny not by aligning their sustainability and management narratives, but by strategically differentiating them to serve distinct audiences. Additionally, the volatility observed across years and sectors may indicate that impression management is more influenced by external pressures, such as regulatory changes, reputational risks, or ESG rating methodologies, than by internal efforts to harmonize disclosure. These findings challenge assumptions in the literature that sustainability reporting naturally evolves toward greater authenticity and alignment. For practice, this implies that stakeholders should remain cautious and critically assess sustainability disclosures, particularly in sectors that exhibit inconsistent or exaggerated shifts in tone and authenticity.

Looking into the scores of individual textual dimensions, our results support the findings by [49], showing that disclosure tone more strongly focuses on reporting good news. They also support findings by [38], showing that language or textual tone dimensions tend to change over time. The main results of our research showed that the tone and clout of sustainability reports are more optimistic and confident compared to management reports. As expected, our study identified negative impression management gaps in both the analytical thinking and authenticity domains, aligning with the research findings of [38,52,53]. Moreover, although the analytical thinking of sustainability reports is relatively high across all sectors and years, authenticity lags behind that of management reports. Overall, the fluctuations in impression management gaps of the analyzed dimensions are high, especially when considering longitudinal and sectoral analysis results. Our results imply that corporate sustainability reporting practices are still emerging, especially as a result of the EU sustainability reporting regulations. We support the suggestions by [101,108,109,110,111] for the need for an updated framework, standardized and transparent disclosure requirements, and experience in reporting, to keep pace with the increasingly higher volumes of sustainability communication. Sustainability reporting was previously little regulated in the EU. This meant that companies could easily engage in impression management when deciding what to report and how to present it. The situation is gradually changing due to the introduction of mandatory sustainability reporting standards and the requirement for third-party assurance of sustainability reporting. The NFRD was introduced as the first sustainability reporting framework and remained effective during the study period. Although reporting became compulsory for large companies, companies were free to choose standards and reporting formats. In the future, along with the introduction of the EU’s CSRD requirements, further changes in corporate sustainability reporting and its textual dimensions are anticipated. This should decrease the possibilities of impression management and the likelihood of greenwashing.

Our analysis confirmed that impression management in sustainability reports is sector-specific, supporting findings by [98,112] that the industry plays a crucial role in the quantity and quality of non-financial information disclosed, especially between companies facing high financing constraints [113]. In our study, it was clearly evident in the services and manufacturing sectors, suggesting that companies representing these sectors engage in greenwashing activities more frequently. In line with previous findings [114], we suggest that companies operating in different sectors may be subject to varying sets of standards or rules, and such companies might be impacted differently by external sectoral events and adverse sector-specific effects. Companies in sectors whose activities have an adverse impact on the environment and society might disclose more and use more impression management techniques than businesses in other sectors. Since companies use management and sustainability reporting as tools to establish and maintain credibility with stakeholders, sector-specific features influence how they report on their operations. New requirements related to the assurance of sustainability reports could help mitigate an overly optimistic tone, thereby reducing the presence of greenwashing. Sector-specific sustainability reporting standards are crucial for addressing high engagement in impression management in certain sectors, as they enable the disclosure of unique or sector-specific information. In regard to longitudinal analysis, our results lead to the conclusion that the EU NFRD regulation has led to favorable changes—the impression management gap of the tone dimension has shrunk slightly, while the authentic dimension varied considerably.

Changes in sustainability reporting requirements necessitate that companies modify and refine their sustainability reporting procedures to meet increasingly demanding and comprehensive sustainability reporting requirements and assurance standards. However, one of the key aspects of greenwashing, impression management, remains relevant for companies. Moreover, the lack of standards and consistency in standards and classification makes it challenging to determine whether businesses follow stringent regulations requiring complete disclosure of both positive and negative impacts, which can be a challenge for stakeholders. Stakeholders must push for clear definitions and common standards, both sector-specific and general, to combat greenwashing. We advocate for more comprehensive regulatory requirements, particularly the adoption of sector-specific sustainability reporting standards. This would help improve the reliability, verifiability, and transparency of information in sustainability reports. Therefore, future studies investigating changes in textual dimensions will be necessary to uncover the effects of new regulations on the prevention of greenwashing.

While longitudinal analysis of impression management gap scores offers valuable insights, the observed volatility—particularly in authenticity—raises questions about the stability and reliability of these linguistic proxies. Although this variability may reflect emerging reporting practices in the Baltic region and the EU as a whole, alternative explanations must be considered. Sector-specific disclosure norms, changes in report authorship, strategic shifts in communication, and external events (e.g., regulatory changes or crises) may all influence the linguistic features and structure of corporate reports. Additionally, LIWC-based metrics are sensitive to subtle changes in language use, which may introduce measurement noise, especially in shorter or less standardized texts. These factors suggest that impression management gaps should not be interpreted in isolation. Future research should explore the robustness of these measures across different contexts, triangulate findings with qualitative data or third-party ESG ratings, and consider expanding the sample to include companies from other EU regions, more regulated sectors, and less regulated to enhance generalizability.

Policy implications. Our research indicates that companies engage in greenwashing by deliberately employing impression management strategies in their sustainability reports. This finding supports the EU’s push to tighten sustainability reporting and assurance requirements. But addressing greenwashing requires more targeted action. First, regulators should implement sector-specific sustainability reporting standards, focusing on industries with the highest volatility and impression management risks, such as manufacturing and services. This ensures that disclosures accurately reflect real performance, rather than strategic framing. Second, sustainability assurance procedures should adopt new approaches and methodologies to strengthen the reliability and depth of assurance practices, such as mandatory linguistic reviews to detect manipulative language patterns. Third, standardized reporting templates can speed up the development of consistent practices, reduce variability, and limit opportunities for impression management. Overall, regulators must recognize that greenwashing involves not only false or misleading claims but also subtle rhetorical tactics that shape stakeholder perceptions. Therefore, supervisory bodies should monitor both the content and tone of disclosures and set clear guidelines for impression management boundaries. These steps will help preserve the integrity of sustainability communication and protect market efficiency.

Practical implications. Our research found that impression management in sustainability reports is predominantly higher than in management reports, suggesting that such practices are likely driven by greenwashing. Companies, especially in sectors with significant environmental and societal impacts, should align their sustainability reporting with evolving regulations and adopt transparent communication strategies. By using impression management techniques, companies can self-assess how their sustainability reports may be perceived by stakeholders, helping to minimize greenwashing risks. While companies may use impression management to enhance their public image, stakeholders must approach sustainability reports with caution, as these reports can be shaped by strategic choices that may mislead. To make informed decisions, stakeholders must critically assess the authenticity of sustainability claims, looking beyond surface-level metrics to understand the actual impact.

6. Conclusions

We examined greenwashing in corporate sustainability reporting by calculating the impression management gap between sustainability and management reports. The current study explored four impression management dimensions: tone, analytical thinking, clout, and authenticity.

Our research revealed that sustainability and management reports differ in linguistic style and that significant impression management gaps exist between sustainability and management reports, for tone, clout, and analytical thinking, but not for authenticity. Compared to management reports, the tone of sustainability reports was overly optimistic, and the reports were prepared with a higher degree of confidence, while being less analytical and authentic, which suggests the use of impression management techniques, potentially leading to greenwashing.

An analysis of impression management gaps across sectors revealed greenwashing in all dimensions, except authenticity. Moreover, the impression management gaps indicated a high likelihood of greenwashing in the services, manufacturing, and residual sectors. In contrast, the utilities sector was estimated to have the lowest likelihood of greenwashing.

Analysis of longitudinal changes did not reveal a clear trend in the direction or strength of greenwashing. Significant fluctuations in the impression management gap were observed during different reporting periods, indicating the emergence of sustainability reporting practices. Nevertheless, substantial changes in the impression management gap dimensions (specifically, analytical thinking and authenticity) should raise red flags for stakeholders, whose decisions, when made based on sustainability reports, should be made with caution. Mandatory sustainability reporting standards and the assurance of sustainability reports are likely to address the issue of greenwashing as more clearly regulated sustainability reporting and assurance practices evolve.

Limitations of the research can be identified. Although this research is longitudinal in nature and analyzes management and sustainability reports over a 4-year period, a more extended period of investigation is needed to examine how various regulatory regimes affect disclosure tone, especially in the case of sustainability reports. Another limitation is related to the sample. In the sample, all available companies that reported sustainability and represented various sectors were included. However, 11 companies had to be excluded from the sample due to the reports’ unreadable format and other restrictions. Moreover, the distribution among the sectors was not equal due to the limited number of companies included in the NASDAQ OMX Baltic Main List.

In the future, the sample could be expanded to include more companies and cover a broader range of countries. Furthermore, continuous research in this area is necessary, as corporate disclosures are expected to evolve rapidly due to the introduction of new regulations. These changes may impact the textual tone of the sustainability reports, potentially yielding a range of outcomes. Therefore, it would be relevant to explore how impression management in sustainability reports changes in response to the new CSRD and the compulsory, heavily regulated ESRS. Another aspect—to compare assured and unassured sustainability reports to evaluate if mandatory assurance of sustainability reports is able to tackle the issue of impression management.