[New Publication] Apostolos Ampountolas Examines How Markets React to ESG Greenwashing Crackdowns
Apostolos Ampountolas, Associate Professor of Hospitality Finance at Boston University’s School of Hospitality Administration, has published a new paper, “The Market Impact of Greenwashing Crackdowns: Evidence from Environmental, Social, and Governance (ESG) Exchange-Traded Funds (ETFs),” in the Journal of Behavioral and Experimental Finance. The study, co-authored with Yagmur Saglam of Sinop University, looks at how regulatory crackdowns on ESG greenwashing in the United States and Europe affect the pricing of ESG-focused ETFs.
Using a stacked event study covering 2021 through 2025, the authors examine three types of regulatory action and their effects on fund performance. Broad naming rule reforms, such as the SEC’s Names Rule and new guidelines from the European Securities and Markets Authority (ESMA), led to meaningful short-term underperformance in ESG funds. By contrast, enforcement actions against individual firms, including BNY Mellon, Goldman Sachs, and DWS, had little measurable market impact. Reconstitutions of thematic ESG indexes caused temporary dislocations that reversed quickly.
The findings suggest that investors respond far more strongly to systemic changes in how ESG is defined than to isolated enforcement cases against individual companies. According to the authors, this points to label governance, the rules that determine what can be marketed as sustainable, as the primary channel through which regulatory oversight moves markets, rather than sporadic sanctions.
The article is open access for 50 days. Read the paper here.