Work

Financial distress and corporate ESG greenwashing

Year: 2026

Type: article

Abstract: Understanding the drivers of greenwashing is crucial for promoting genuine sustainability practices. This study uses data from A-share listed companies between 2009 and 2022, applying resource dependence theory to examine whether and how financial distress affect environmental, social, and governance (ESG) greenwashing. Our findings indicate that financial distress prompts companies to engage in ESG greenwashing. Mechanism analysis shows that financial distress encourages companies to adopt ESG greenwashing by reducing green innovation and harming corporate reputation. Heterogeneity analysis shows that this promoting effect is stronger in companies with high customer concentration, significant media pressure, and intense industry competition. Additionally, ESG greenwashing induced by financial distress leads to a range of economic consequences, including reduced debt financing scale, misallocation of government environmental subsidies, and decreased analyst earnings forecast accuracy. This study enhances the literature on ESG greenwashing drivers by providing fresh perspectives on how financial distress influences corporate sustainability practices.

Source: International Review of Economics & Finance

DOI: 10.1016/j.iref.2026.104938

Authors: Ruiqian Li, Chang Che, Tong Huang

Institution: Heilongjiang University

Language: English

Topic: Corporate Social Responsibility Reporting

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Climate action

Open Access status: gold

Estimated APC paid: $1,930