Tax Avoidance Linked to Increased Greenwashing in 391 ASX Companies, Study Finds

On July 3, 2026, a study from Murdoch University revealed that companies listed on the Australian Securities Exchange (ASX) that aggressively engage in tax avoidance are more likely to participate in greenwashing. This research analyzed 391 ASX companies from 2019 to 2022, aiming to understand the correlation between tax practices and environmental claims.

Tax Avoidance and Greenwashing Correlation

The study, published in Business Strategy & Development, indicates that during periods of economic uncertainty, firms may prioritize their public image over genuine sustainability efforts. According to Dr. Augustine Donkor, the lead author, "The aim of our research was to understand whether these pressures encourage some companies to rely on image rather than actually taking genuine action to improve their environmental performance."

The research utilized tax, environmental, and ESG data to reveal that companies adopting aggressive tax strategies are inclined to use greenwashing as a reputation management tool. This trend was particularly pronounced among firms with a defender business strategy, which typically emphasizes stability and efficiency.

Surprising Findings on Business Strategies

Dr. Donkor noted that the link between tax avoidance and greenwashing was unexpected, especially for defender firms, which are traditionally conservative in their approach. "Defender business strategies are usually quite conservative—focusing on efficiency, cost control, stability and protecting an established market position, rather than pursuing aggressive growth or innovation," he stated.

The findings suggest that defender firms might view greenwashing as a low-cost method to manage their reputation, particularly when facing financial stress. This raises questions about the ethical implications of such practices in the corporate landscape.

Implications for Investors and Policymakers

The study emphasizes the need for enhanced transparency and scrutiny of both sustainability reporting and corporate tax practices. Dr. Donkor remarked, "For policymakers, this could support more rigorous reporting standards and better verification of environmental and corporate social responsibility (CSR) claims."

Investors are encouraged to look beyond marketing claims to evaluate whether a company's actions align with its environmental promises. Consumers are advised to demand measurable evidence supporting sustainability claims instead of accepting attractive branding at face value.

• Study published: July 3, 2026
• Number of companies analyzed: 391 ASX firms
• Research period: 2019 to 2022
• Lead author: Dr. Augustine Donkor

For more information, refer to the study titled Surviving Strategy: The Tax Avoidance–Greenwashing Nexus and the Moderating Role of Business Strategy.