Page 41 - CMA Journal (Nov-Dec 2025)

)RFXV 6HFWLRQ
Harnessing Artificial Intelligence to Avert

Corporate Greenwashing in Pakistan

Corporate greenwashing is one of the management vices the transparency of
that aims at deceptively informing stakeholders about corporate sustainabili-
the environmental implications of company operations ty activities. Multina-
(Forliano et al., 2025). This phenomenon is an important tional corporations
issue, because it negatively affects the reporting around the globe are
practices, market relations, and sustainability now criticized for
performance of ESG-compliant organizations (Poiriazi et exaggerating environ-
al., 2025). Existing literature has empirically validated that mental commitments
corporate greenwashing practices have a negative for the sake of invest-
impact on the image of the organization, its performance ment and good public-
in the market, and the trust of stakeholders (Dempere et ity. One possible
al., 2024). Therefore, the negative consequences of solution to this issue is
greenwashing imply that these actions need to be the utilization of
prevented and tackled in a timely manner. This avenue AI-integrated tools,
has been especially important in the environment of a which can offer more Dr. Muhammad
developing economy like Pakistan, which is one of the accurate reporting, Haroon Rasheed
most susceptible economies to climate change and faces monitoring, and verifi-
severe consequences of global climate events every year. cation of environmen- Lecturer (Commerce) at
tal claims. Malik Firoz Khan Noon
Pakistan is particularly vulnerable to corporate Business School,
greenwashing due to its weak economic health, Developed global University of Sargodha
corporate governance, and increasing exposure to economies are already
natural calamities. Even though traditional corporate leading the way in using AI-based solutions to address
governance tools are widely adopted and utilized among greenwashing and ensure strong ESG adherence. The
corporates in Pakistan, the effectiveness of these tools application of artificial intelligence to analyze sustainability
remains questionable, which can be further extended to reports by corporations has been recognized as a frame-
the effectiveness of existing climate and ESG reforms. work for ensuring accuracy and consistency in reporting. At
Corporate greenwashing is therefore an important threat the same time, companies use machine-learning models to
to sustainable economic development in this country. predict environmental impacts, thus opening up new
Innovation of technologies and their subsequent avenues to improve ESG performance. These international
precedents serve as useful models that may guide Pakistan
implementation is a key entry point in ensuring that
corporate greenwashing is effectively prevented (John et toward the right path in climate financing and ESG reforms.
al., 2025). Empirical studies indicate that technology Therefore, it can be concluded that the role of AI in support-
improves economic, social, and environmental aspects of ing climate finance and ESG projects in Pakistan, especially
organizational sustainability and efficiency, which in preventing corporate greenwashing, can be central.
reduces greenwashing practices (Islam, 2025). The new Machine learning, natural-language processing, and block-
opportunities from the recent proliferation of artificial chain are just a few technologies that comprise AI-enabled
intelligence (AI) technologies have led to broader solutions with high potential to enhance ESG reporting and
opportunities to improve and optimize organizational provide stakeholders with reliable information regarding
outcomes (Bahoo et al., 2023). corporate environmental performance.
AI provides substantial opportunities to address the issue It is also possible to use the algorithms of natural-
of greenwashing, as it can help produce more transparent language processing to systematically study corporate
and factual information while monitoring it in real time. sustainability statements, exposing both falsifications
These capabilities can help firms, regulators, and investors and exaggerations. AI can process large, heterogeneous
validate organizational claims to determine whether they datasets to reveal keywords or phrases that indicate
reflect genuine sustainability programs or fraudulent greenwashing in corporate releases, news articles, and
statements. Greenwashing also undermines trust in the press releases, thereby revealing the gap between
sustainability of corporations and impedes the achieve- claimed sustainability and actual environ-mental impact.
ment of national and international environmental
outcomes. AI can thus be very instrumental in improving
ICMA’s Chartered Management Accountant, Nov-Dec 2025