Supply chain digitalization and ESG greenwashing: A signal reliability perspective

Environmental, Social, and Governance (ESG) greenwashing is often attributed to firm-level opportunism, yet less is understood about how the broader information environment systematically shapes the reliability of ESG signals. We address this gap by examining how supply chain digitalization (SCD) curbs greenwashing by reducing two distinct information asymmetries and enhancing signal reliability. We argue that digitalization enhances supply chain transparency, thereby improving signal fit by reducing supply chain vertical information asymmetry, and strengthening signal honesty by reducing ESG disclosure information asymmetry. Leveraging China's supply chain innovation and application pilot policy as a quasi-natural experiment and analyzing data from Chinese A-share listed firms, we find that digitalization significantly reduces ESG greenwashing, particularly in firms with higher supply chain complexity and higher analyst forecast dispersion. Our study contributes to research on ESG greenwashing, the digital governance of sustainability, and signaling theory by reframing greenwashing as a problem of signal unreliability shaped by the supply chain information environment, and by showing how supply chain digitalization improves both the accuracy and credibility of corporate signals.