The Influence of Environmental Regulations on the Phenomenon of Greenwashing

Abstract

Implementing environmental regulations plays a pivotal role in addressing pollution and attaining sustainable development. However, the role of environmental regulations in mitigating greenwashing remains insufficiently explored. Based on Chinese listed companies from 2010 to 2021, this paper investigates the effect of environmental regulation on the greenwashing of heavily polluting enterprises and the internal mechanism of such regulation. The research findings indicate that the execution of environmental regulatory policies can curb corporate greenwashing, with differences in individual enterprises and the level of local environmental governance. Further, we also reveal that environmental regulation can further strengthen the disincentives to corporate greenwashing by promoting corporate green innovation and local market-oriented. This paper further presents theoretical and empirical evidence to support effective government management of corporate greenwashing and promoting green economy development.