Environmental management system certification and corporate ESG greenwashing

Zhonghua Cheng and Xueqin Yan

Energy Economics, 2025, vol. 149, issue C

Abstract: Environmental management system certification (EMSC) has been widely recognized for its effectiveness in enhancing corporate environmental management performance and alleviating environmental pollution. However, it may concurrently facilitate corporate ESG greenwashing through opportunistic behavior. Leveraging the distinct strengths of double machine learning in both variable selection and model estimation, we analyze data from Chinese listed firms during 2012 to 2022 to examine the effects and mechanisms of environmental management system certification on corporate ESG greenwashing within the double machine learning framework. The empirical results reveal that: (1) Environmental management system certification significantly suppresses corporate ESG greenwashing, and this finding holds consistently across various endogeneity and robustness tests. (2) Mechanism analysis indicates that environmental management system certification can affect firms' internal governance and external stakeholder attention, thereby constraining earnings management, enhancing stakeholder supervision, and reducing inefficient investment, thus mitigating corporate ESG greenwashing. (3) Heterogeneity analysis suggests that the impact of environmental management system certification in curbing ESG greenwashing is more pronounced for small-scale firms, private firms, and firms in clean industries.

Keywords: Environmental management system certification; ESG greenwashing; Earnings management; Inefficient investment (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:149:y:2025:i:c:s0140988325006279

DOI: 10.1016/j.eneco.2025.108800

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