Voluntary environmental regulations, greenwashing and green innovation: Empirical study of China's ISO14001 certification

Voluntary environmental regulations play a crucial role in promoting green innovation. However, the existing literature on the subject has yielded inconsistent conclusions. To address this issue, this study utilizes data from China's list companies between 2008 and 2020, employing both the difference-in-differences (DID) and instrumental variable methods to accurately estimate the impact of ISO14001 certification on green innovation. Our findings indicate that ISO14001 certification enhances both the quantity and quality of green innovations. Furthermore, our results remain robust even after implementing the propensity score matching (PSM) method and conducting placebo tests. This paper also excludes heterogeneous treatment effect bias in staggered DID. In addition, the impact of ISO14001 on green innovation is focused on green innovation related to source control. The study also considers the impact of greenwashing and ownership on the relationship between ISO14001 certification and green innovation. Greenwashing is found to have a negative impact on green innovation, especially in terms of quality, and enterprises with more greenwashing tend to have a weaker response to ISO14001 certification. Finally, our mechanism test indicates that ISO14001-induced green technology innovation serves as a leverage effect on existing innovation activities, rather than a crowding-out effect on other technological innovations or a speculative activity aimed at defrauding government subsidies.