The green shield: Intellectual property protection and corporate greenwashing in environmental, social, and governance

Abstract

Corporate greenwashing is a form of deceptive environmental behavior that can have serious negative impacts on social sustainability. Environmental regulations are unable to address the root causes of corporate greenwashing, promoting the advancement of social institutions may be a more effective solution. This paper is the first to examine the relationship between intellectual property protection (IPP) policy and corporate greenwashing behavior based on data from Chinese A-share companies from 2009 to 2021. We find that IPP significantly and robustly reduces corporate greenwashing, indicating that IPP acts as a "green shield". Mechanism analysis shows that strengthening internal and external supervision and increasing market competition are potential channels through which IPP suppresses corporate greenwashing. Additional analysis further supports these mechanisms. Moreover, the "green shield" effect of IPP is more pronounced in regions with stronger environmental law enforcement, industries with higher technological content, firms with weaker financing constraints, and companies whose management has a longer-term vision. In summary, this research expands the toolkit for governing corporate false green behavior and offers new insights for emerging economies to promote social sustainable development from the perspective of IPP.