The ESG Illusion: Greenwashing and the Challenge of Legal Gaps in Corporate Sustainability in Thailand

Greenwashing—the practice of companies overstating or misrepresenting their environmental and sustainability commitments—remains a major challenge to the integrity of Environmental, Social, and Governance (ESG) initiatives. This issue is particularly prevalent in jurisdictions lacking strong legal frameworks, effective enforcement mechanisms, and widespread stakeholder awareness. While many developed economies have moved toward stricter ESG disclosure regulations, developing countries such as Thailand face significant structural barriers, including a weak legal framework, limited regulatory oversight, and the absence of clear corporate and director accountability. Additionally, socioeconomic factors contribute to the challenge, as consumers and businesses in these markets often prioritize affordability over sustainability, reducing the pressure on corporations to improve ESG performance. In an environment where the demand for low-cost goods and services outweighs concerns over corporate environmental impact, the effectiveness of ESG disclosure regimes is further diminished.

A critical challenge in ESG policy is the global reliance on disclosure as the primary mechanism for corporate sustainability, often overlooking the legal and institutional deficiencies in developing economies. In Thailand, the absence of strong public monitoring renders ESG disclosures ineffective, reducing them to mere formalities rather than meaningful accountability tools. To strengthen corporate responsibility, Thailand and similar developing nations may require additional legal frameworks, including clearer statutes assigning corporate liability, enhanced director accountability, and stricter legal consequences for ESG violations. Expanding corporate liability beyond shareholder interests to encompass broader stakeholder impact—such as environmental degradation and social harm—could significantly improve ESG enforcement and deter greenwashing practices. By addressing these regulatory gaps, developing economies can create a more robust system for sustainable corporate governance and ensure that ESG commitments translate into genuine, enforceable obligations.

This article examines the legal deficiencies in Thailand’s ESG framework by comparing it with stricter regulatory regimes in jurisdictions such as the United States, the European Union, and Australia. By analyzing best practices in corporate and director accountability, this study highlights how well-structured legal frameworks and enforcement mechanisms can deter misleading sustainability claims. Ultimately, this paper advocates for stronger legal obligations, heightened corporate liability, and increased penalties for ESG violations in Thailand, arguing that disclosure alone is insufficient to ensure corporate accountability and long-term sustainability.