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Regulatory Identification and Governance Path of “Greenwashing” Behavior: Policy Implications Based on the Comparison of ESG Fund Holdings between China and the United States

In: Proceedings of the 2025 International Conference on Hybrid Commerce, Human Capital, and Economic Dynamics (ICHCH 2025)

Author

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  • Ziqing Yang

    (Royal Melbourne Institute of Technology University, Business School)

Abstract

ESG (Environmental, Social, and Governance) ratings are widely used by investors to assess firms’ sustainability performance. However, significant discrepancies among ESG rating agencies raise concerns about the reliability and potential misuse of these ratings. This paper examines whether divergence in ESG ratings is associated with greenwashing behavior by firms. Using a global sample, the study finds that firms with greater ESG rating divergence are more likely to engage in symbolic ESG disclosures, such as boilerplate language, and are less likely to make substantial improvements in their actual ESG performance. The association is stronger among firms with high media coverage and low analyst following, suggesting that information asymmetry may facilitate greenwashing practices. These findings highlight the risks posed by inconsistent ESG evaluations and emphasize the need for standardized ESG metrics and more rigorous scrutiny of corporate ESG disclosures. Improving transparency and comparability in ESG assessments is critical for enhancing the integrity and effectiveness of sustainable investing practices.

Suggested Citation

  • Ziqing Yang, 2026. "Regulatory Identification and Governance Path of “Greenwashing” Behavior: Policy Implications Based on the Comparison of ESG Fund Holdings between China and the United States," Advances in Economics, Business and Management Research, in: Ata Jahangir Moshayedi (ed.), Proceedings of the 2025 International Conference on Hybrid Commerce, Human Capital, and Economic Dynamics (ICHCH 2025), pages 489-501, Springer.
    • Handle: RePEc:spr:advbcp:978-2-38476-585-0_55
    DOI: 10.2991/978-2-38476-585-0_55
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