Greenwashing and sustainable finance: an approach anchored in the philosophy of science

Abstract

This paper argues that certain erroneous premises upon which the mainstream finance paradigm is based are a structural cause of greenwashing. By scrutinizing the metatheoretical hypotheses of this paradigm through a critical realist lens, we aim to show that it rests upon on tacit representations that impose a distorted view of financial ‘knowledge’, financial systems, the Earth System, and society. This ontological bias leads to fallacious research questions, biased methodologies, and has even generated ill-advised policies that are conducive to the financialization of nature. We then put forth that critical realism could offer realistic metatheoretical foundations for the development of a new ecological finance paradigm.