Environmental Regulation and the Credibility of Corporate Climate Commitments: Evidence from China’s Net-Zero Transition

Achieving a credible net-zero transition requires reliable corporate environmental information to support effective climate governance. When firms overstate environmental commitments without corresponding improvements in actual performance, regulatory signals become distorted, and decarbonization efforts are weakened. This study examines whether stringent command-and-control environmental regulation enhances the credibility of corporate climate commitments. Using the staggered implementation of China’s Air Pollution Prevention and Control Action Plan as a quasi-natural experiment, we construct a firm-level measure of corporate greenwashing that captures the divergence between environmental discourse and regulatory performance. Based on a multi-period difference-in-differences model, the results indicate that environmental regulation significantly reduces corporate greenwashing, with the probability of inconsistency between environmental claims and actual behavior declining by approximately 25 percent relative to the sample mean. Mechanism analysis shows that this effect operates through increased green technological innovation and heightened public environmental concern, which together strengthen substantive compliance and external monitoring. The moderating analysis shows heterogeneous responses across firms: board independence strengthens the policy’s inhibitory effect, while market share and institutional ownership attenuate it. Overall, the findings suggest that command-and-control regulation improves the credibility of disclosure and reinforces the informational foundations necessary for an effective net-zero transition.