Green Factory Certification and Firms' Synergistic Gains in Pollution Abatement and Carbon Reduction: Market and Government Perspectives

ABSTRACT As an emerging voluntary environmental regulation in China, the green factory certification policy raises a crucial research question: How can the coordinated control of multiple pollutants be effectively achieved? This paper examines the impact and underlying mechanisms of green factory certification on firms' coordinated efforts in carbon reduction and pollution abatement, drawing on both market‐based and government‐led logics. Using a sample of A‐share listed firms in China from 2011 to 2021, we integrate hand‐collected data on 1031 green‐certified factories. The study finds that the green factory certification policy significantly promotes the coordinated advancement of pollution reduction and carbon mitigation in enterprises. This policy effect is driven by the dual governance of market and government logic. Through market mechanisms, it channels investors' green preferences and stimulates green technological innovation, while through government mechanisms, it increases government subsidies and improves state‐firm relations, thereby enhancing policy effectiveness. Further analysis reveals that firms' greenwashing motives may weaken these synergistic gains. However, the non‐binding mechanism of the voluntary programme and the binding mechanism of mandatory environmental regulation can generate complementary effects, amplifying the environmental benefits of the green factory initiative. These effects are more pronounced in cleaner industries.