Corporate Greenwashing Unexpectedly Caused by the Green Credit Policy: A Comparison between Environmental Sustainability Information Disclosure and Actual Environmental Protection Investment from China’s Listed Companies

Chaoyu Cao, Qibo Chen and Lili Zhu ()
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Chaoyu Cao: School of Sociology and Anthropology, Xiamen University, Xiamen 361005, China
Qibo Chen: School of Public Policy and Management, Tsinghua University, Beijing 100084, China
Lili Zhu: School of Public Policy and Management, Tsinghua University, Beijing 100084, China

Sustainability, 2024, vol. 16, issue 17, 1-14

Abstract: This paper employs a continuous difference-in-differences model to compare environmental sustainability information disclosure with the real environmental investment amount of listed companies in China before and after the implementation of the Green Credit Guidelines, and it investigates the influence of Green Credit Policy on corporate environmental sustainability information greenwashing. The results show that the Green Credit Policy unexpectedly leads to the greenwashing of environmental sustainability information of listed companies. After the implementation of the Green Credit Policy, the amount of positive environmental information disclosed by listed companies has increased faster than that of corporate environmental investment. Further research on the intermediary effect shows that the reason why the Green Credit Policy leads to greenwashing is that the Green Credit Policy greatly reduces the availability of bank credit for enterprises on the restricted list, and these enterprises will relax the financing constraints caused by the policy in the future and thus adopt the greenwashing behavior. Heterogeneity analysis shows that these effects become smaller in state-owned enterprises and enterprises with large commercial financing scales, as they are less affected by financing constraints of the Green Credit Policy. The policy goal of the Green Credit Policy is to limit the financing of polluting projects and promote the sustainable development of enterprises. However, by comparing the corporate environmental sustainability information disclosure and the actual amount of environmental investment, this paper finds that the Green Credit Policy has unexpectedly led to corporate greenwashing. This result goes against the policy goal of sustainable development. Commercial banks should be more cautious about the environmental sustainability information voluntarily provided by enterprises to correct these distorted results.

Keywords: greenwashing; corporate environmental investment; Green Credit Policy; credit constraint; environmental sustainability information disclosure (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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