Climate policy uncertainty and corporate greenwashing: Developing a new metric for selective investment practices

This study introduces a novel quantitative framework to measure selective investment greenwashing, leveraging a dynamic Pearson correlation coefficient applied on a rolling basis. Using empirical data from the Chinese capital market, we explore how climate policy uncertainty impacts corporate greenwashing behavior. Our findings indicate that heightened CPU exacerbates greenwashing, particularly through selective disclosure and selective investment practices. By examining the underlying mechanisms, we observe that CPU leads to stricter environmental regulations and a reduced presence of green investors, both of which heighten firms’ incentives to engage in greenwashing.