The Impact of Green Public Procurement on Corporate ESG Greenwashing: Evidence from China

Abstract

Green Public Procurement (GPP) serves as a crucial tool on the demand side for fostering an economic shift towards sustainability. This study empirically examines the inhibitory effect of GPP on corporate ESG greenwashing and its underlying mechanisms, based on ESG rating data of A-share listed companies in China and GPP contract announcements between 2015 and 2020. The findings indicate that GPP significantly mitigates corporate ESG greenwashing, and this conclusion is robust across various sensitivity tests. Mechanism analysis shows that GPP operates through three primary channels: alleviating financing constraints, promoting green innovation, and enhancing corporate green reputation. Further heterogeneity analysis demonstrates that the ESG greenwashing mitigation effect of GPP is more pronounced in firms operating in highly competitive industries, with high analyst attention, and at the mature stage. This study highlights the potential role of GPP in guiding enterprises toward genuine sustainable practices. Additionally, it provides valuable policy recommendations for developing countries aiming to strengthen environmental governance and refine green procurement frameworks.