Integrating Blockchain and Artificial Intelligence to Counter Greenwashing in ESG Investing: A Framework with Special Reference to India

Abstract

The global surge in Environmental, Social, and Governance (ESG) investing—managing over $30 trillion by 2023—has been shadowed by widespread greenwashing, where firms exaggerate or falsify sustainability credentials. This study addresses the critical problems of fragmented data, lack of transparency, and over‑reliance on self‑reported corporate disclosures. The primary objective is to design and conceptually validate a synergistic framework combining blockchain’s immutable ledger with artificial intelligence (AI) for real‑time, tamper‑proof ESG verification. The proposed architecture integrates IoT sensors, corporate systems, and alternative data; stores verified information on a permissioned blockchain; and applies natural language processing, anomaly detection, and continuous monitoring through AI. Key findings indicate that the framework enhances data integrity, automates compliance via smart contracts, and significantly reduces information asymmetry. Focusing on the Indian context—where ESG mutual funds exceeded ₹12,300 crore in 2024 and regulators like SEBI have introduced mandatory BRSR reporting and stricter green bond rules—the study identifies both opportunities and implementation challenges. The paper offers actionable recommendations for policymakers, financial institutions, and technology providers to foster trustworthy sustainable finance.