GRI adoption and corporate brownwashing: Board governance evidence from ASEAN-5

Abstract

To fully grasp the corporate information disclosure cycle, one needs to study both greenwashing and brownwashing (the shrouding of negative information). While greenwashing research has grown substantially, strategic underreporting (brownwashing) has received less attention. This study investigates the combined effect of voluntary sustainability-standard adoption and internal governance on brownwashing by publicly listed firms in the five largest ASEAN economies (ASEAN-5) from 2014 to 2024. Using panel models with firm- and year-fixed effects on 1,506 firm-year observations from 385 listed companies, we examine brownwashing across both the extensive margin (decision to report) and intensive margin (degree of underreporting). The adoption of the Global Reporting Initiative (GRI) framework decreases the likelihood of brownwashing. However, once brownwashing occurs, estimates indicate a modest, marginally significant reduction in underreporting severity. This extensive-margin effect is more precisely estimated than the intensive-margin effect. Across robustness checks, the directional pattern holds, though statistical significance is weaker in the smallest subsamples. No direct evidence connects board gender diversity or board sustainability committees to brownwashing, notably in an environment where female directors occupy an average of only 18.97% of seats. Sustainability committees also show no association with GRI adoption, indicating that external reporting guidelines and internal governance structures act as independent channels. These findings broaden the scope of ESG decoupling research and suggest that regulators in developing economies should pair voluntary reporting standards with independent assurance rather than relying solely on board governance.