Identification of ESG Greenwashing and Its Economic Consequences --A Dual Case Study of Luckin Coffee and Nayuki

Wei Zeng; Zeming Guo; Zeyu Zhang

doi:10.70088/9gpfmc61

Authors

Wei Zeng School of Accounting, Nanfang College, Guangzhou, China Author
Zeming Guo School of Accounting, Nanfang College, Guangzhou, China Author
Zeyu Zhang School of Accounting, Nanfang College, Guangzhou, China Author

DOI:

https://doi.org/10.70088/9gpfmc61

Keywords:

esg, greenwashing, esg ratings, corporate governance, social responsibility

Abstract

Against the backdrop of booming environmental, social, and governance (ESG) investment, corporate greenwashing and inconsistent rating methodologies significantly weaken the validity of ESG information. To address this critical issue, this study utilizes Luckin Coffee (representing governance-dimension fraud) and Nayuki (representing social-dimension food safety scandals) as dual case studies. By adopting a novel "claims-behavior-incidents" analytical framework, this paper systematically compares greenwashing identification mechanisms, market rating reactions, and subsequent economic outcomes across different ESG dimensions. The empirical findings reveal distinct behavioral patterns: governance-dimension fraud is highly verifiable, triggering abrupt rating downgrades and severe capital market punishments. In contrast, social-dimension incidents exhibit rating stickiness, leading to a more gradual release of market risks. Furthermore, the analysis uncovers two hidden rating divergences within current ESG evaluation systems: absent coverage for certain critical issues and cross-dimension divergence in scoring methodologies. These insights highlight the limitations of existing ESG rating agencies in capturing nuanced corporate misconduct. Ultimately, this research provides valuable implications for investors, regulators, and rating agencies to improve ESG information disclosure, refine evaluation frameworks, and mitigate the adverse economic consequences of corporate greenwashing in emerging markets. This comprehensive approach not only enriches the theoretical literature on ESG performance but also offers practical guidance for enhancing market transparency and sustainable development.

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