Beyond greenwashing: How does firm-level biodiversity disclosure affect corporate sustainability strategy?

This paper examines the impact of firm-level biodiversity disclosure on corporate sustainability strategy. Using a sample of Chinese A-share listed companies from 2009 to 2022, we find that a higher level of firm-level biodiversity disclosure is associated with a reduction in corporate green washing tendency, which is measured by the ESG report textual similarity. This effect is mainly achieved through reduction in information asymmetry and the promotion of green transition. Cross-sectional heterogeneity test reveals that the impact is more pronounced in firms with lower media coverage, firms in non-heavy-polluting industries, firms with weaker environmental regulations pressure, and firms with lower managerial myopia. Further analysis shows that increased firm-level biodiversity disclosure also enhances the tone of ESG reports and alleviate corporate financing constraints. This paper contributes to a better understanding of the economic impacts of environmental disclosure and expands the literature on the determinants of corporate sustainability strategy.