Climate policy uncertainty and enterprise greenwashing: evidence from China

Climate policy uncertainty (CPU) grows as global warming worsens. Countries face unprecedented challenges and uncertainties on the road to tackling climate change. In order to deal with CPU, enterprises have adopted a series of strategic behaviours, which hinder the sustainable development of the economy. How to alleviate the strategic behaviour of enterprises during CPU periods has become an urgent problem that needs to be solved. The influence of CPU on greenwashing is discussed with the observation sample of Chinese listed companies. Research findings: First, CPU increases the possibility of enterprise greenwashing. In particular, enterprises with high report attention and bankruptcy risk are more likely to greenwash during periods of CPU. Second, CPU increases the likelihood of greenwashing by exacerbating enterprises’ financing constraints. However, CPU does not significantly impact enterprises’ cashflow profile and digital transformation. Finally, the signing of the Paris Agreement has exacerbated CPU’s negative impact on enterprise greenwashing. The results can reduce the negative impact of policy uncertainty and provide a reference for improving enterprises’ sustainable environmental performance.