The Insider Blind Spot: Whistleblower Protection, ESG Fraud, And The Case For External Recognition

Abstract

This paper focuses on the theme of ESG Fraud and Greenwashing: Rethinking Corporate Accountability, analyzing the role of whistleblowing in exposing ESG-related misconduct and strengthening corporate accountability. ESG standards are now a key method for promoting corporate sustainability, transparency, and ethical governance. However, the rise in greenwashing and ESG fraud has caused concerns about the reliability of corporate disclosures and the effectiveness of current enforcement methods. This paper looks at whistleblowing as an important tool for revealing ESG-related misconduct. It also compares the whistleblower protection systems in India and the United States. Regardless of the importance of these organizations to fraud detection via disclosure, they are excluded from the existing whistleblower protection and reward systems in both countries. It is argued that current whistleblower legislation is overly focused on insiders and fails to account for the realities of ESG regulatory enforcement. A new legal mechanism to recognize and support credible external disclosures is proposed. By examining the Adani sustainability-linked bond scandal, the paper finds that serious ESG scams are usually detected not by company insiders but by non-profit organizations, independent researchers, and market analysts who work with publicly available information. In the U.S., whistleblowers benefit from both the Dodd-Frank Act and the Sarbanes-Oxley Act, which provide strong legal safeguards, complete anonymity, and monetary rewards. In contrast, the Indian framework suffers from numerous shortcomings, including a lack of coherence and an inability to address ESG issues.