Can Green Labeling Foster the Green Transformation of Manufacturing? Evidence From China's Green Factory Certification

ABSTRACT Green factories, as the central component of the green manufacturing system, represent a critical institutional mechanism for driving the green transformation of the manufacturing sector. This study systematically evaluates the impact of green factory certification on firms' green total factor productivity (GTFP) using data from manufacturing companies listed on the Shanghai and Shenzhen A‐shares between 2012 and 2023, employing a multiperiod difference‐in‐differences model. The findings indicate that the green factory certification policy significantly enhances firms' GTFP, thereby facilitating the green transformation of the manufacturing industry. This conclusion remains robust after conducting several robustness checks, including parallel trend tests, Bacon decomposition, and machine learning techniques. Mechanism analysis reveals that the policy drives improvements in GTFP by alleviating financing constraints, stimulating green technological innovation, and enhancing the quality of environmental information disclosure. Heterogeneity analysis further demonstrates that the policy has a more pronounced effect in high‐pollution industries, whereas its impact is relatively weaker for firms with stronger market bargaining power or political ties. Additionally, the moderating effect analysis reveals that well‐established internal corporate governance and external societal supervision can significantly enhance the policy's effectiveness. The study provides empirical evidence and policy recommendations to optimize the green manufacturing policy framework, improve policy precision, and enhance green performance.