Green Washing, Green Bond Issuance, and the Pricing of Carbon Risk: Evidence from A-Share Listed Companies

Zhenyu Zhu (), Yixiang Tian, Xiaoying Zhao and Huiling Huang
Additional contact information
Zhenyu Zhu: School of Economics and Management, University of Electronic Science and Technology of China, Chengdu 611731, China
Yixiang Tian: School of Economics and Management, University of Electronic Science and Technology of China, Chengdu 611731, China
Xiaoying Zhao: School of Economics and Management, University of Electronic Science and Technology of China, Chengdu 611731, China
Huiling Huang: School of Economics and Management, University of Electronic Science and Technology of China, Chengdu 611731, China

Sustainability, 2025, vol. 17, issue 11, 1-23

Abstract: As global climate change intensifies and carbon emission policies become increasingly stringent, carbon risk has emerged as a crucial factor influencing corporate operations and financial markets. Based on data from A-share listed companies in China from 2009 to 2022, this paper empirically examines the pricing mechanism of carbon risk in the Chinese capital market and explores how different corporate signaling behaviors affect the carbon risk premium. The findings reveal the following: (1) Carbon risk exhibits a significant positive premium (annualized at about 1.33% per standard deviation), which remains robust over longer time windows and after replacing the measurement variables. (2) Heterogeneity analysis shows that the carbon risk premium is not significant in high-energy-consuming industries or before the signing of the Paris Agreement, possibly due to changes in investor expectations and increased green awareness. Additionally, a significant difference in the carbon risk premium exists between brown and green stocks, reflecting a “labeling effect” of green attributes. (3) Issuing green bonds, as an active corporate signaling behavior, effectively mitigates the carbon risk premium, indicating that market investors highly recognize and favor firms that actively convey green signals. (4) A “greenwashing” indicator constructed from textual analysis of environmental information disclosure suggests that greenwashing leads to a mispricing of the carbon risk premium. Companies that issue false green signals—publicly committing to environmental protection but failing to implement corresponding emission reduction measures—may mislead investors and create adverse selection problems. Finally, this paper provides recommendations for corporate carbon risk management and policy formulation, offering insights for both research and practice in the field.

Keywords: carbon risk; carbon information disclosure; text analysis; green washing; green bonds (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/17/11/4788/pdf (application/pdf)
https://www.mdpi.com/2071-1050/17/11/4788/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:17:y:2025:i:11:p:4788-:d:1662380

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().