Page 227 - AJWEP-22-4

Asian Journal of Water, Environment and Pollution. Vol. 22, No. 4 (2025), pp. 219-239.
doi: 10.36922/AJWEP025280219

ORIGINAL RESEARCH ARTICLE

Corporate environmental, social, and governance
greenwashing behavior under Central Environmental

Protection Inspection: An executive attention perspective

Chen Lv , Jian Wang , Qi Zhao , Yuanyuan Xu , and Yunjiao Xu*
Department of Business Management, School of Economics and Management, Tianjin Chengjian University, Tianjin, China
*Corresponding author: Yunjiao Xu (chengjianiah@126.com)

Received: June 20, 2025; Revised: July 22, 2025; Accepted: July 25, 2025; Published online: August 20, 2025

Abstract: The Central Environmental Protection Inspection (CEPI) program is an important strategic deployment
of China’s reform in the field of environmental protection that has attracted the attention of academia. However,
with respect to the impact of CEPI on corporate environmental, social, and governance (ESG) greenwashing
(Gws) behavior, particularly from the perspective of executive attention, the specific manifestations and strategic
adjustments of corporate executives remain to be explored in greater depth. Based on the panel data of A-share–listed
companies in Shanghai and Shenzhen from 2013 to 2022, this paper employed the difference-in-differences model,
with fixed year and industry effects, to examine the impact of CEPI on ESG Gws of enterprises. Empirically, it
is found that CEPI can effectively inhibit corporate ESG Gws after one lagged period. For mechanistic analysis,
financial slack (Fs) can positively moderate the effect of CEPI on corporate ESG Gws. In terms of the heterogeneity
test, enterprises characterized by chief executive officer (CEO) duality, as well as those with executives possessing
postgraduate education and financial backgrounds, exhibit a more pronounced effectiveness in curbing Gws
practices. Moreover, further analysis revealed that high-powered CEOs are more actively utilizing Fs to cater to
policy requirements. This research reveals the key factors in regulating enterprises’ environmental behaviors and
curbing ESG Gws, while expanding the application scope of attention theory in enterprise management practices.
It offers distinct implications for central regulators, local governments, and individual enterprises and provides new
theories and ideas for the harmonious development of economies and the environment across various countries.

Keywords: Central Environmental Protection Inspection; Financial slack; ESG greenwashing; Executive attention

1. Introduction As economic entities driven by profit maximization,
enterprises tend to employ various strategies to reduce
Against the backdrop of growing global governmental their environmental compliance costs when confronted
attention to sustainable development, nations with the financial pressures imposed by environmental
worldwide have implemented a series of environmental policies, thereby seeking to enhance their profit
policies aimed at improving environmental quality, margins. In this process, environmental, social, and
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thereby facilitating the achievement of Sustainable governance (ESG) greenwashing (Gws) has emerged
Development Goals (SDGs). However, the effective as one of the common tactics adopted by enterprises
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enforcement of environmental policies ultimately to respond to environmental policies—specifically,
hinges on corporate practices and implementation. enterprises convey positive environmental trends to

Volume 22 Issue 4 (2025) 219 doi: 10.36922/AJWEP025280219