The environmental-financial nexus: Centralized environmental monitoring, eco-consciousness, and green revenues

Amid tightening environmental governance, we examine whether and how firms’ eco-consciousness leads to a harmonious balance between environmental and economic performance in the form of green revenues. We utilize China's centralization of environmental monitoring in 2015 as the basis for a difference-in-differences methodology, using highly and less eco-conscious firms as the treatment and control groups. We find that relative to less eco-conscious firms, highly eco-conscious firms derive greater green revenues post-centralization. This finding is robust to underlying firm characteristics and unobservable industry- and time-specific heterogeneity. Regional internet infrastructure development and corporate greenwashing mitigation facilitate the effect on highly eco-conscious firms’ green revenues, suggesting that effective centralized monitoring relies on an integrated information transmission network and an improvement in firms’ genuine environmental accountability. Overall, eco-consciousness facilitates a win-win scenario between environmental and economic performance under an increasingly strict environmental regulatory landscape.