False Green, True Damage: The Erosion of Supplier Sustainability Through Greenwashing Spillovers in Supply Chains

Using matched supplier–client data of Chinese A‐share listed companies (2009–2024), we examine how client greenwashing affects suppliers' green total factor productivity (GTFP). We find that client greenwashing significantly suppresses suppliers' GTFP, indicating that downstream firms' selective environmental communication can translate into real efficiency losses in upstream green production. This effect mainly operates through a weakened information environment and reduced supplier green efforts. Further analyses show that the effect is stronger when dependence asymmetry is more pronounced or more difficult to mitigate, namely when clients have greater market influence, when client information transparency is lower, or when suppliers have a lower degree of digital transformation. Our findings reveal that selective environmental communication generates spillover effects beyond disclosing firms, adversely impacting suppliers' green development.