Will informal environmental regulation become a new incentive to reduce corporate ESG greenwashing? Empirical evidence from public environmental concerns

The effect of environmental regulations on corporate environmental, social, and governance (ESG) performance and greenwashing behaviour has become the focus of academic attention. This research empirically analyzes the influence of public environmental concern on the ESG performance and greenwashing behaviour of listed companies from the perspective of informal regulations based on the panel data of A-share listed companies from 2007 to 2022. Results show that public environmental concern significantly improves corporate ESG performance, and the conclusion still holds after robustness tests of one period lag, systematic generalized method of moments, and two-stage least squares regression. Heterogeneity analysis shows that public environmental concern has a significantly positive effect on the ESG performance of state-owned enterprises, non-heavily polluting enterprises, and technology-intensive enterprises but a significantly negative effect on the ESG performance of labour-intensive enterprises. Further moderating effect results indicate that government governance and market constraints strengthen the positive effect of public environmental concern on firms’ ESG performance. Finally, this study confirms that public environmental concern has a significant inhibitory effect on corporate greenwashing behaviour. The findings of the study are of great practical significance for enterprises to improve the quality of their environmental information disclosure.