Words vs. wallets: environmental rhetoric–action mismatches and firm carbon intensity in the energy transition

Introduction Against the backdrop of China’s comprehensive push toward the “dual carbon” goals, local governments are expected not only to articulate green development commitments in annual work reports, but also to translate those commitments into concrete action through environmental governance inputs. Yet policy rhetoric and governance inputs do not always move in tandem, and whether such rhetoric–action divergence affects firms’ abatement behavior remains underexplored. Methods Using matched city–firm data from China for 2008–2015, this paper employs a two-way fixed effects model to examine how divergence between local governments’ environmental rhetoric and policy action affects firms’ carbon emission intensity and through which channels. Results We find that greater rhetoric–action divergence significantly increases firms’ carbon emission intensity: a one-standard-deviation increase in the gap raises carbon emission intensity by 3.4%. Mechanism analysis shows that this effect mainly operates through three channels: weakened city-level innovation capacity, reduced investment attraction, and lower environmental regulatory intensity. Heterogeneity analysis further indicates that the effect is more pronounced for state-owned enterprises and foreign-invested firms. Reducing the rhetoric–action gap generates sizable abatement gains and remains net beneficial even after accounting for the associated fiscal costs. Discussion Overall, the paper identifies rhetoric–action consistency as a distinct and underexplored dimension of local green governance quality. Strengthening such consistency can reinforce firms’ incentives to reduce emissions and allow environmental governance to deliver positive net gains under real fiscal constraints.