The Impact of Environmental Protection Tax Towards Corporate ESG Greenwashing

Hongwen Jia and Jiayi Liu ()
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Hongwen Jia: School of Economics, Lanzhou University, Lanzhou 730000, China
Jiayi Liu: School of Economics, Lanzhou University, Lanzhou 730000, China

Sustainability, 2025, vol. 17, issue 21, 1-23

Abstract: Nowadays, with the continuous development of corporate ESG ratings, greenwashing has occurred continuously. In order to clarify the influence of the environmental protection tax (EPT) on corporate ESG greenwashing, this paper employs the implementation of the Environmental Protection Tax Law (EPTL) as a quasi-natural experiment, based on the sample data of Shanghai and Shenzhen A-share listed companies during 2015–2022. Using a Difference-in-Differences model to analyze the effect and mechanism of the EPT on corporate ESG greenwashing, we obtain the following findings: (1) The EPT can curb corporate ESG greenwashing, and this effect is more obvious in non-state-owned enterprises, non-labor-intensive enterprises, low-competitive industries, and enterprises located in the east-central region of China. (2) From a mechanistic perspective, reducing information asymmetry and promoting green transformation are two important paths. (3) Higher ESG ratings increase the inhibition of the EPT towards corporate ESG greenwashing.

Keywords: environmental protection tax; corporate ESG greenwashing; information asymmetry; green transformation; ESG rating uncertainty (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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