Pilot policies for climate-adaptive urban development and corporate greenwashing behavior

Against the backdrop of a worldwide consensus on green development and rising expectations for corporate accountability, greenwashing—an implicit, strategic form of adaptation—undermines institutional trust in environmental governance and hampers the efficient allocation of organizational resources. Using the pilot policies for climate-adaptive urban development as a quasi-natural experiment and drawing on upper-echelons theory and endowment theory, this study systematically examines how incentive-based regulation curbs corporate greenwashing and through which channels it operates. The evidence shows that the pilot policies significantly reduce greenwashing by (i) elevating executives’ environmental awareness through a suite of incentives and (ii) improving corporate access to green financing, thereby dampening their motivation to misrepresent environmental performance. The mitigating effect is more pronounced in firms whose top teams have limited green experience, in regions with low public environmental concern, in non-state-owned enterprises, and in highly competitive industries. Additional analysis reveals that the policies enhance firm value precisely by suppressing greenwashing. By focusing on these pilot policies, the paper underscores the positive spillovers of incentive-oriented environmental regulation and offers guidance for governments seeking to steer enterprises and build a resilient climate-governance framework.