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CEPI & ESG greenwashing: Exec. attention view

unique role of Fs in corporate operational decision- on urban air quality improvement, environmental
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making and in responding to external regulatory governance, and the environmental effects of local
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pressures, this paper explored the heterogeneous and central direct governance. 12,24 Some scholars found
impacts of CEPI on corporate Gws behavior under that strengthening local government supervision can
varying levels of Fs, thereby improving the variable facilitate the effective implementation of environmental
system of the study. protection policies. In addition, other scholars
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also verified that the intensity of local government
2. Literature review supervision affects the effectiveness of environmental
pollution control. This new environmental protection
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2.1. ESG Gws initiative has reinforced the concept of green
Due to the lack of unified information disclosure development among the Chinese Communist Party
standards, enterprises that voluntarily release ESG committees and governments at all levels, while
reports may make selective disclosure or false disclosure clarifying the environmental protection responsibilities
for opportunistic purposes. The behavior of enterprises of governments and departments at all levels. Moreover,
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exaggerating positive information and concealing it has mitigated issues such as local protectionism
negative information will lead to a mismatch between their that prioritizes development over environmental
ESG reports and actual performance. The inconsistency protection and arbitrary interference in environmental
between the words (“say”) and actions (“do”) of inspections by local Party committees and governments.
enterprises in respect of ESG leads to “greenwashing” Consequently, it has become an effective environmental
and intensifies the degree of information asymmetry regulatory tool, significantly improving air quality and
between enterprises and investors. Some scholars reducing pollution emissions. However, some literature
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observed that certain enterprises have been repeatedly indicated that when confronted with difficulties in
listed on the “China Greenwashing List,” exhibiting a economic development, certain local governments may
habitual tendency toward Gws. Furthermore, some temporarily set aside environmental governance efforts,
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studies have revealed that Gws enterprises engage in conduct inspections in a perfunctory manner, adopt a
mutual learning, leading to a pattern of “imitation- “one-size-fits-all” approach toward enterprises, and
diffusion” in Gws behaviors across enterprises. It has even engage in covering up environmental pollution
also been found that underinvested firms tend to drift incidents. 27
green due to insufficient equity checks and balances, Research on micro-level effects centered on the
as well as management shortsightedness. They then impacts of CEPI on corporate economic activities,
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use greenwashed data to draw in investment and boost including the influence of executives’ prior public
institutional shareholding, further encouraging Gws. office experience on corporate environmental behavior
However, the promotion’s impact is diminished once the following the implementation of CEPI; the effect of
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green finance policy is put into place. 17 government–enterprise collusion on corporate ESG
The governance of ESG Gws behavior has been the performance; and the mechanisms through which CEPI
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subject of extensive inquiry by numerous academics. drives improvements in ESG performance. According
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Some scholars think that digital transformation can to these studies, CEPI has the potential to decrease the
stop Gws; others believe that institutional pressure privilege of sewage discharge in public office, prevent
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can prevent corporate Gws. More academics hold government–enterprise collusion, encourage corporate
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that companies’ executive awareness of environmental green innovation, boost total factor productivity,
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protection is the key to reducing ESG Gws and that improve the performance of industries that produce a
different environmental regulatory policies will lot of pollution, and increase the positive performance
have different effects on executive awareness of of businesses in terms of green development and social
environmental protection. They also deem that responsibility fulfillment. 31
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executives who are more aware of environmental
protection can fully exercise their subjective initiative 2.3. Impact of CEPI on ESG Gws
to lessen the likelihood of Gws behavior. 21 At present, the majority of research focuses on the
benefits that CEPI offers to businesses. For example,
2.2. Studies on CEPI researchers have discovered that the inspection
There are two streams of study regarding CEPI—macro mechanism can effectively improve businesses’
and micro perspectives. The macro-level studies focus environmental performance and ESG ratings, both
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Volume 22 Issue 4 (2025) 221 doi: 10.36922/AJWEP025280219