Green promises or greenwashing? Unveiling the impact of China's low-carbon city pilot policy

• Use China's Low-Carbon City Pilot (LCCP) as a quasi-natural experiment to examine corporate greenwashing reduction. • Assess governmental regulatory awareness and residents' low-carbon nutrition as key drivers of reduced corporate greenwashing. • Corporate greenwashing effects vary from the heterogeneity of firm, industry and regional characteristics. This study investigates the impact of China's Low-Carbon City Pilot (LCCP), introduced in 2010, on corporate greenwashing behaviors, and to explore how government policies can shape corporate environmental practices. Using a difference-in-differences (DID) approach, this paper analyzes data from Chinese A-share firms in Shanghai and Shenzhen from 2009 to 2022. The result shows that the LCCP significantly reduces greenwashing and is robust across various empirical tests, including parallel trends and placebo analyses. The mechanism analysis shows that the LCCP enhances government attention to green development and raises public low-carbon awareness. Heterogeneity analysis indicates that the policy's effects are stronger in small-scale, low-finance constrain, low-emission firms, and industries with low competition and pollution, particularly in the central and western regions. This study contributes to understanding how LCCP impacts corporate environmental practices and provides insights into policy design for mitigating greenwashing and promoting sustainable business practices.