Environmental Courts and Corporate ESG Greenwashing

ABSTRACT Environmental courts serve as a pivotal judicial mechanism for addressing corporate ESG greenwashing. Based on data from China's A‐share listed corporations from 2009 to 2023, this study employs a double machine learning (DML) model to empirically examine the causal effect of environmental courts on corporate ESG greenwashing. The findings indicate that: (1) Environmental courts significantly curb corporate ESG greenwashing, a result that holds across a series of robustness checks. (2) Heterogeneity tests suggest that the inhibitory effect manifests more strongly in large corporations, corporations without political connections, technology‐based corporations, and polluting corporations. (3) Mechanism tests reveal that environmental courts mainly operate through four pathways: refining judicial review standards, strengthening guidance from case precedents, enhancing judicial review capacity, and intensifying judicial accountability.