Combating <scp>ESG</scp> Greenwashing Through <scp>AI</scp> Models: Evidence From Disaggregated <scp>AI</scp> Technologies, Mechanisms, and Thresholds

ABSTRACT This study examines how artificial intelligence language models influence corporate environmental, social, and governance greenwashing () behavior, utilizing panel data from Chinese listed firms spanning 2012–2022. We investigate the mechanisms, technological disaggregation, threshold dynamics, and contextual heterogeneity characterizing this relationship. Employing a large language model to construct refined measures of AI adoption, our empirical analysis yields four principal findings. First, AI language models reduce . Second, technological disaggregation demonstrates substantial heterogeneity across AI subfields: machine learning and planning‐decision systems exert the strongest constraining effects on , while other AI categories show limited influence. Third, mechanism analysis reveals that AI constrains through two primary transmission channels, workforce skill restructuring and firm performance enhancement. Fourth, threshold regression analysis reveals critical nonlinearities: the AI– GW ESG relationship exhibits structural shifts contingent upon environmental regulation intensity and green technology sophistication. Fifth, subsample analysis stratified by pollution intensity, ownership structure, and technological orientation shows that AI's deterrent effect intensifies among heavily polluting enterprises, non‐state‐owned firms, and technology‐intensive sectors—contexts where disclosure credibility faces maximum scrutiny and organizational absorptive capacity enables effective AI integration. These findings suggest that recognizing AI's potential for environmental governance requires coordinated policy interventions: promoting AI deployment in environmentally critical domains, strengthening regulatory frameworks that leverage AI's analytical capabilities, investing in complementary human capital and digital infrastructure, and designing differentiated support mechanisms calibrated to firm heterogeneity. Firms can leverage on Ai models to boost transparency and Accountability of ESG reporting. Regulators and policymakers can investigate developing guidelines on the usage of AI technology to curb ESG greenwashing and improve sustainable practices.