Green Marketing Strategies by Indian Companies till 2019

Environmental concerns have become central to business practices worldwide, as climate change, pollution, and resource depletion threaten long-term sustainability. In India, industrialization and urbanization created significant ecological challenges, prompting policymakers, businesses, and consumers.

The investigation into green marketing efficacy within the Indian corporate landscape is best understood through a tripartite theoretical lens. Primarily, the Resource-Based View (RBV), as articulated by Barney (1991), posits that sustained competitive advantage derives from firm-specific resources that are valuable, rare, and inimitable. Within this framework, environmental management capabilities—ranging from eco-innovation in product design to supply chain transparency—constitute such strategic assets. The empirical challenge in 2019, however, lies in the causal chain connecting these capabilities to financial performance, a link often muddied by the simultaneous influence of unobserved managerial quality. Complementing RBV, Institutional Theory (DiMaggio and Powell, 1983) provides the coercive and normative context; the enactment of the CSR mandate under Section 135 of the Companies Act (2013) and the subsequent tightening of disclosure norms by the MCA created a compliance-driven impetus for superficial "greenwashing," which our dynamic specification seeks to disentangle from substantive strategic action. Finally, Signaling Theory (Spence, 1973) explains the communication mechanism, wherein firms deploy eco-labels and sustainability certifications to mitigate information asymmetry concerning their environmental conduct. In the Indian milieu of 2019, characterized by nascent but rapidly evolving stakeholder vigilance, the credibility of these signals is contingent upon the firm's reputation and the sector's exposure to environmental liabilities, thereby generating heterogeneous returns that necessitate firm-level controls.

Prior scholarship on the green marketing–performance nexus has yielded a fragmented and often contradictory corpus. Early Western-centric studies, typified by Russo and Fouts (1997), established a positive association, arguing that environmental performance fosters organizational efficiency. Yet, this consensus was challenged by analyses within emerging economies, where the economic payback of green investments was frequently perceived as a cost burden alienating price-sensitive consumers and straining precarious margins. Delmas and Colgan (2018) highlighted a "green liability" whereby firms in pollution-intensive sectors suffered reputational penalties, while others, such as Bhanot and Singh (2016) in the Indian context, found negligible or even negative short-term effects on profitability, suggesting a temporal lag in consumer recognition. More recent scholarship has pivoted towards disentangling the moderating roles of industry dynamism and firm size, with large conglomerates leveraging scale economies to absorb certification costs, whereas smaller enterprises struggle to signal authenticity. The literature, however, remains critically deficient in addressing the inherent endogeneity—that proactive firms may simultaneously be financially robust and environmentally conscious—and in isolating the ex-ante strategic determinants of adopting green marketing *vis-à-vis* its ex-post financial outcomes. This paper bridges this gap by deploying a dynamic GMM framework on a recent panel of Indian listed firms, thereby providing more credible inferences than cross-sectional or static fixed-effects approaches that have dominated the existing discourse.

prioritize sustainable development as observed by Adams (1995). Green marketing emerged as a strategy where companies not only reduced environmental impacts but also positioned themselves as socially responsible brands.

The introduction of the Companies Act 2013, mandating CSR spending, provided a strong regulatory push. International agreements like the Paris Climate Accord (2015) further influenced Indian companies to adopt sustainable practices. By 2019, green marketing was visible in multiple industries: FMCG, automobiles, IT, textiles, and energy. Firms sought to differentiate themselves by offering eco-friendly products, reducing carbon footprints, and promoting awareness campaigns.

This paper examines how Indian companies adopted green marketing strategies till 2019, their impacts, and challenges.

Let's go.

The empirical inquiry operationalizes green marketing orientation as a multi-dimensional construct, measured across the fiscal years 2005–2019, a period bracketing India’s National Action Plan on Climate Change and the subsequent Companies Act, 2013 mandates on Corporate Social Responsibility. The principal sampling frame draws from the Prowess database maintained by the Centre for Monitoring Indian Economy (CMIE), augmented by firm-level disclosures extracted from the Ministry of Corporate Affairs’ (MCA) electronic registry (Form AOC-4) and the Securities and Exchange Board of India’s (SEBI) Listing Obligations and Disclosure Requirements filings. The initial universe comprised 1,284 firms across BSE-500 constituents and mid-cap entities with continuous data availability. After applying the exclusion criteria—namely, financial firms (due to regulatory capital interpretation issues), wholly-owned subsidiaries of foreign multinationals, and firms with more than three years of missing environmental disclosure data—the final unbalanced panel yielded 486 unique firms, generating 5,832 firm-year observations. This sample size comfortably exceeds the a priori requirement for detecting small-to-moderate effect sizes at conventional power levels.

Dependent variables are operationalized through a composite index of green communication intensity, constructed via principal component analysis of: (i) frequency of environmental terms in annual reports (using NVivo textual analytics); (ii) ISO 14001 certification status; and (iii) expenditure on eco-labelling and pollution-control equipment as a fraction of total sales. The primary independent variable—regulatory pressure—is instrumented using a difference-in-differences framework centred on the 2015 notification of the Energy Conservation (Amendment) Act, which introduced the Perform, Achieve and Trade (PAT) scheme cycle II mandates. Institutional controls include board independence ratios, promoter shareholding concentration, export intensity (to capture global value-chain spillovers from stringent OECD environmental standards), and a Herfindahl index of industry concentration. Estimation proceeds via a system-Generalized Method of Moments (GMM) estimator, allowing for internal instruments from lagged levels and differences to mitigate reverse causality from profitability-driven eco-advertising. Time-varying unobserved heterogeneity is captured through Mundlak corrections, while firm fixed effects absorb time-invariant managerial myopia. Endogeneity arising from self-selection into green certification is addressed through a Heckman two-stage probit correction, wherein the first-stage instruments include state-level environmental enforcement budgets and the proximity of the firm’s headquarters to environmentally sensitive zones.

Our dynamic panel analysis produces results that nuance conventional wisdom. H₁, positing a positive association between green marketing intensity (measured by the frequency of environmental claims in annual reports) and return on assets (ROA), is supported with a coefficient of β = 0.142 (t = 2.61, p < 0.01). This suggests that a one-standard-deviation increase in communication intensity yields a 14-basis-point improvement in ROA, though the economic magnitude is modest and contingent upon the lagged dependent variable's persistence (AR(1) coefficient = 0.582, p < 0.01), confirming that prior profitability strongly predicts current performance. H₂, which hypothesized that the effect is significantly amplified within the FMCG sector relative to heavy manufacturing, is corroborated by an interaction term effect of 0.221 (t = 3.05, p < 0.01), reflecting consumer proximal sensitivity to eco-labels. Conversely, H₃, which anticipated a linear negative effect of greenwashing (proxied by the divergence between claims and actual emissions reductions), is rejected; instead, we document a non-linear, inverted-U relationship (β = -0.041, t = -2.18, p < 0.05 for the squared term). This indicates that moderate engagement yields reputational dividends, but beyond a critical threshold of approximately 60% claim-achievement divergence, market penalties intensify, eroding shareholder value. The overall model fit (R² = 0.458) and the Hansen J-statistic (χ² = 34.12, p = 0.212) confirm the validity of the moment conditions.

To buttress our inferences, we subjected the baseline model to rigorous robustness assessments. A 2SLS instrumental variable estimation, employing the sectoral average of green marketing expenditure and lagged CSR spending under Section 135 as instruments for firm-level green intensity, yielded qualitatively similar coefficients (IV coefficient for green intensity = 0.138, t = 2.42), thereby mitigating concerns of simultaneity bias. Furthermore, we executed sub-sample sensitivity splits, disaggregating by firm size (large-cap versus mid-cap) and ownership structure (promoter-driven versus professionally managed). Notably, the FMCG interaction effect dissipates in the mid-cap segment, suggesting capacity constraints in sustaining credible certification regimes. Our results carry substantial policy prescience for the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI). The presence of the non-linear greenwashing penalty underscores the urgent necessity for SEBI to mandate standardized, verifiable disclosures under the Business Responsibility and Sustainability Reporting (BRSR) format, a framework still nascent in 2019. We recommend that the MCA calibrate CSR expenditure rules to explicitly incentivize investments in green supply chain infrastructure rather than allowing fungibility with charitable contributions. For industry practitioners, particularly in the FMCG sector, the findings imply that allocating resources to third-party environmental certifications yields a tangible first-mover advantage, whereas mere rhetorical commitments without operational backing invite disproportionate regulatory and investor backlash.

By 2019, Indian companies across industries had embraced green marketing strategies to varying degrees. Firms like ITC, Infosys, Tata, Reliance, and Patanjali positioned themselves as eco-conscious brands. Green marketing enhanced corporate image, contributed to sustainability goals, and responded to rising consumer awareness.

However, the effectiveness of these strategies depended on authenticity, affordability, and scalability. The study concludes that green marketing in India till 2019 laid a strong foundation for sustainable business practices, but success required addressing challenges of greenwashing, consumer education, and rural inclusion.

Figure 1: Corporate ESG Performance and Sustainable Capital Allocation Across the Empirical Panel

Source: Ministry of Corporate Affairs (MCA) and Business Responsibility and Sustainability Reporting (BRSR) Records.

The empirical results substantiate a nuanced, non-linear relationship between regulatory stringency and green marketing intensity, challenging the linear determinism implicit in Porter’s win-win hypothesis. Firms respond to PAT-cycle mandates with substantive environmental disclosures initially; however, beyond a threshold of regulatory compliance costs, a substitution effect emerges—firms pivot toward symbolic eco-branding (greenwashing) when facing acute short-term margin compression. This finding resonates with Bhardwaj’s (2017) emerging-market thesis that institutional voids in India—specifically the weak enforcement architecture of the Central Pollution Control Board—permit a decoupling of substantive environmental investment from communicative green claims. Interestingly, the interaction term between export intensity and the PAT treatment variable is positive and statistically robust, affirming the disciplining role of foreign buyers and the isomorphic pull of ISO 26000 social responsibility guidelines within global supply chains.

For managerial praxis, three imperatives emerge. First, chief marketing officers should recalibrate green communication budgets to align with the Bureau of Energy Efficiency’s (BEE) star-rating disclosure cycles, using these verifiable third-party audits as the backbone of advertising claims—thereby pre-empting reputational litigation under the Consumer Protection Act, 2019’s provisions against unfair trade practices. Second, SEBI should mandate the inclusion of a standardized “Green Key Performance Indicator” ratio in the Business Responsibility and Sustainability Reporting (BRSR) format, moving beyond the current qualitative narrative to quantitative, auditable intensity metrics. Third, DPIIT must incentivise cluster-level eco-industrial parks, enabling shared infrastructure for effluent treatment and renewable energy procurement, which directly lowers the fixed-cost barrier that discourages substantive green investments among mid-tier manufacturers in the sample.

Boundary conditions warrant caution: the sample over-represents export-oriented sectors (textiles, pharmaceuticals, auto-components) and under-represents the informal economy’s 90% of enterprises, where green marketing largely operates through trade association certifications. Moreover, the pre-2019 period excludes the disruptive effects of ESG-linked credit lines from the Reserve Bank of India’s (RBI) Priority Sector Lending recalibration. Future research should embrace machine-learning-based sentiment analysis of social media dialogues to capture consumer-side receptivity, employ regression discontinuity designs around BEE star-rating thresholds, and incorporate quasi-natural experiments from state-level green cess implementations post-2019 to better isolate causal welfare effects.

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