ORIGINAL RESEARCH article
Front. Environ. Econ.
Sec. Economics of Climate Change
Can Market-Based Environmental Regulation Curb Corporate Greenwashing? Evidence from China's Carbon Emissions Trading Scheme
Provisionally accepted
- Nanjing Audit University Jinshen College, Nanjing, China
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Greenwashing refers to firms' strategic responses that superficially comply with environmental and social responsibilities while substantially resisting them. In recent years, corporate greenwashing has attracted increasing attention, prompting calls for effective environmental regulations to curb such practices. Among various regulatory instruments, market-based mechanisms such as the carbon emissions trading scheme (ETS) have gained wide recognition. This study investigates the impact of China's ETS implementation on corporate greenwashing behaviors, using a panel dataset of A-share listed firms from 2012 to 2022. The empirical results show that the implementation of the ETS significantly restrains greenwashing behaviors. Furthermore, the deterrent effect is more pronounced for firms with higher levels of green innovation and in regions experiencing more advanced industrial upgrading. These moderating effects highlight the importance of internal firm capabilities and external regional development in enhancing regulatory effectiveness. Robustness checks, including parallel trend tests and PSM-DID estimation, confirm the validity of our findings. This study enriches the understanding of China's carbon trading system and provides empirical evidence for policymakers aiming to promote corporate environmental responsibility and improve the design of pilot carbon trading policies.
Keywords: Greenwashing, environmental regulation, carbon emissions trading, Industrial upgrading, CHIAN
Received: 15 Sep 2025; Accepted: 18 Nov 2025.
Copyright: © 2025 Ling, Li and Xv. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
* Correspondence: Chen Ling, 15051892248@163.com
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