The greenwashing trap under decarbonisation pressure: How carbon risk drives corporate ESG greenwashing?–Empirical evidence from China’s capital markets

As the global decarbonisation process accelerates, carbon risks arising from corporate low-carbon transitions may incur potential financial losses and induce deceptive ESG (environmental, social and governance) "greenwashing" practices. This study examines the dynamic relationship between corporate carbon risk and ESG greenwashing using panel data from A-share listed companies on the Shanghai and Shenzhen stock exchanges between 2008 and 2023. Employing a fixed-effects model alongside instrumental variable methods and robustness tests to validate findings, the research reveals: (1) Corporate carbon risk significantly intensifies ESG greenwashing; (2) This effect is more pronounced in state-owned enterprises, high-carbon industries, and pure A-share listed companies, whereas it exerts a suppressing effect on greenwashing in dual-listed companies; (3) Key mechanisms through which carbon risk drives greenwashing include heightened financing constraints, diminished market scrutiny, weakened internal controls, and inadequate sustainability capabilities. This study enriches the theoretical framework on greenwashing drivers and offers practical insights for refining ESG disclosure standards, optimising green finance policies, and promoting substantive corporate emissions reductions.