Monitoring Sustainability : Can Social Security Fund Ownership Curb ESG Greenwashing?

Abstract

This study investigates whether ownership by China’s National Social Security Fund (NSSF) reduces ESG greenwashing among listed firms over the period 2011–2022. Against the backdrop of growing concerns about the credibility of ESG disclosures, we examine the governance role of a large public institutional investor in constraining opportunistic reporting. Using a panel dataset of Chinese A-share firms, we find that higher NSSF shareholdings are significantly associated with lower levels of ESG greenwashing, indicating that firms with greater NSSF ownership are less likely to overstate their sustainability performance. Further analysis shows that this effect operates through enhanced monitoring and stronger incentives for credible disclosure, and is amplified in firms with greater analyst attention, highlighting the complementary role of external information intermediaries. In addition, the effect is more pronounced in state-owned enterprises, where alignment between institutional oversight and state governance structures strengthens monitoring effectiveness. The findings provide new evidence on the governance role of public institutional investors in improving the credibility of ESG disclosures and offer important implications for promoting more transparent and sustainable capital markets.