Sustainable Development Goals omission and environmental sentiment metric
for greenwashing and ESG controversies alerts in green bonds

A. Nicolodi, S. Paterlini, M. Gentile, V. Foglia Manzillo, G. Vittorioso

FinTech No. 16 - December 2025 [PDF]
 

Abstract
Green bonds are a cornerstone of sustainable finance, directing investment toward projects that support environmental objectives and the transition to a low-carbon economy. Yet, the growing risk of greenwashing threatens to undermine the credibility of such instruments. Greenwashing refers to situations where sustainability-related statements do not clearly and fairly reflect, (i.e., through the omission of material information), the underlying sustainability profile of an entity or financial product. The development of robust analytical tools to assess the credibility of issuers’ sustainability claims plays a key role in ensuring that green bond financing genuinely contributes to measurable environmental outcomes, rather than serving merely as a vehicle for reputational enhancement. These tools also support more effective supervision thereby helping to prevent the risk of misleading investors and weakening market trust. Leveraging a combination of dictionary-based techniques and domain specific BERT transformer models, we explore how the omission of Sustainable Development Goals (SDGs) content in corporate disclosure relates to the volume and tone of environmental and SDGs specific language in the sustainability reports of green bonds issuers. To this purpose, we developed two new metrics that allow to systematically assess the link between the disclosure and the risk of misleading sustainability claims and information omission. The first indicator, the Sustainable Development Goals Omission Index (SDGOI), shows that an opportunity-oriented tone in general environmental sentences is positively associated with SDGs omission, potentially representing a distinctive trait of greenwashing risk. Therefore, we introduced the Environmental Sentiment Metric (ESM), a novel indicator that quantifies opportunity-oriented environmental sentiment and connects it to greenwashing accusations and ESG controversies. We found that elevated ESM scores are significantly associated with higher ESG controversy levels and with greenwashing accusations, demonstrating its potential as an alert signal of disclosure credibility risks in the green bond market. Integrating these indicators into the infrastructure of sustainable finance can provide investors and regulators with analytical tools for assessing sustainability disclosures, while encouraging issuers to report transparently and accountably – thereby enhancing the effectiveness and integrity of capital markets.

Authors
Andrea Nicolodi - University of Trento, Department of Economics and Management (andrea.nicolodi-1@unitn.it);
Sandra Paterlini - University of Trento, Department of Economics and Management (sandra.paterlini@unitn.it);
Monica Gentile - CONSOB, Research and Regulation Department (m.gentile@consob.it);
Vincenzo Foglia Manzillo - CONSOB, Issuers Supervisory Department (v.fogliamanzillo@consob.it);
Gianluca Vittorioso - CONSOB, Head of Prospectus Office, Issuers Supervisory Department (g.vittorioso@consob.it);

We would like to thank Paola Deriu (CONSOB, Head of Research and Regulation Division), Guglielmina Onofri (CONSOB, Senior Officer for Sustainable Finance), and Andrea Raffaelli (IT and Artificial Intelligence Division) for their valuable comments. Our sincere thanks also go to Brizio Leonardo Tommasi (Head of Data Management and Artificial Intelligence Office, IT and Artificial Intelligence Division), Ivan Bernabucci, and Alessio Venticinque (Data Management and Artificial Intelligence Office, IT and Artificial Intelligence Division) for their helpful feedback during the implementation phase of the prototype. The authors are the only responsible for errors and imprecisions. The opinions expressed here are those of the authors and do not necessarily reflect those of CONSOB.

JEL Classifications: G34, G38, J33, K22, M52.

Keywords: greenwashing, green bond, AI, NPL, greenwashing alert metric, SDG omission, sentiment analysis.