GREEN BONDS AND CORPORATE ENVIRONMENTAL, SOCIAL, AND GOVERNANCE GREENWASHING: EVIDENCE FROM CHINA

Abstract

In this paper, we examine the relationship between green bond issuance and corporate environmental, social, and governance (ESG) greenwashing using Chinese A-share listed companies between 2011 and 2021. The findings indicate that issuance of green bonds effectively mitigate enterprises’ tendencies toward ESG greenwashing, affirming the stability of China’s green bond market. The analysis of the mechanism demonstrates that the issuance of green bonds can effectively mitigate ESG greenwashing by enhancing information transparency and alleviating financing constraints. Further analysis reveals that the issuance of green bonds effectively mitigates E information greenwashing and S information greenwashing, while it does not significantly impact G information greenwashing. Heterogeneity analysis reveals that the inhibitory impact of green bond issuance on ESG greenwashing is more pronounced within subgroups characterized by high environmental protection subsidies, elevated environmental protection taxes and fees, executives lacking prior experience in environmental protection, and enterprises with limited social responsibility. The findings provide theoretical supplementation of ESG consequences resulting from green bond issuance and elucidate the mechanism for curbing corporate ESG greenwashing. Practically, it will facilitate other countries to enhance their top-level design of green bonds and contribute to achieving carbon neutrality and peak carbon goals.