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<p>This study examines the impact of China’s social credit system (CSCS) on mitigating corporate greenwashing behavior and advancing corporate sustainability. Designed to cultivate a ‘sincerity culture,’ the CSCS significantly elevates social trust and acts as a transformative influence within corporate settings to promote genuine sustainability efforts. Employing a staggered difference-in-differences model on a panel of Chinese listed firms from 2011 to 2020, our findings indicate that firms headquartered in CSCS pilot cities experience marked increases in trust and reductions in greenwashing. The curbing effect of CSCS on greenwashing is more salient among small firms, those with limited analyst coverage, and firms in highly competitive industries or cities with lax environmental regulations. Improved information asymmetry, eased financing needs, and enhanced media attention emerge as three key mechanisms driving these results. Additionally, CSCS enforcement contributes to enhanced corporate sustainability outcomes such as greater customer loyalty, higher sales profit growth, more environmental investments, and lower carbon emissions. Overall, our evidence shows that firms in pilot cities benefit from more stable and cooperative relationships with various key stakeholders, who co-enforce sustainability norms. We conclude by discussing the moral ambivalence of enforcing sincerity, the ordo-ethical implications of the CSCS, and its potential to advance corporate sustainability and responsibility.</p>

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Social Trust and Corporate Greenwashing: Insights from China's Pilot Social Credit Systems

  • 期刊论文

  • 发表日期：

    2025年7月16日

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  • Jiacai Xiong,
  • Linghong Chen,
  • Yushu Zhu,
  • Thomas Maak

摘要

This study examines the impact of China’s social credit system (CSCS) on mitigating corporate greenwashing behavior and advancing corporate sustainability. Designed to cultivate a ‘sincerity culture,’ the CSCS significantly elevates social trust and acts as a transformative influence within corporate settings to promote genuine sustainability efforts. Employing a staggered difference-in-differences model on a panel of Chinese listed firms from 2011 to 2020, our findings indicate that firms headquartered in CSCS pilot cities experience marked increases in trust and reductions in greenwashing. The curbing effect of CSCS on greenwashing is more salient among small firms, those with limited analyst coverage, and firms in highly competitive industries or cities with lax environmental regulations. Improved information asymmetry, eased financing needs, and enhanced media attention emerge as three key mechanisms driving these results. Additionally, CSCS enforcement contributes to enhanced corporate sustainability outcomes such as greater customer loyalty, higher sales profit growth, more environmental investments, and lower carbon emissions. Overall, our evidence shows that firms in pilot cities benefit from more stable and cooperative relationships with various key stakeholders, who co-enforce sustainability norms. We conclude by discussing the moral ambivalence of enforcing sincerity, the ordo-ethical implications of the CSCS, and its potential to advance corporate sustainability and responsibility.