Air Pollution, Health Concern and Firms Greenwashing Behaviors: Evidence from Agri-Food Sector in China

Abstract

This paper examines the impact of air pollution on the greenwashing behaviors among firms in China's agri-food sectors. To establish causality, we employ the ventilation coefficient as the instrumental variable, and conduct spatial regression discontinuity analyses across the China's Qinling-Huai River boundary. The findings demonstrate that the agri-food firms located in polluted areas have higher tendency to greenwash than others. The baseline conclusion is supported by robustness tests conducted with different specifications. The potential mechanisms may be attributed to increased public health concerns regarding air pollutants and heightened attention to green food products. The effects are more pronounced in firms facing stronger competition, financial constraints, and lower-quality information disclosure, as well as in non-state-owned firms. Furthermore, mass media amplifies public concerns regarding air pollution, intensifying its impact on agri-food firms' greenwashing. Our study helps understanding of the consequences of air pollution on the agri-food sector and presents relevant policy implications for regulatory authorities to comprehend firms' ESG misleading behavior.

Keywords: Air pollution, Agri-food firms, ESG, Greenwashing, Natural experiment, China.