Information disclosure and pollution reduction: evidence from environmental NGO monitoring in China

Abstract

This paper investigates the impact of environmental information disclosure on firm pollution behavior by leveraging an exogenous shock which allow Chinese environmental non-governmental organizations (ENGOs) to disclose pollution information. Using a difference-in-differences approach comparing firms in disclosed cities versus undisclosed cities, we find ENGO information disclosure significantly reduces manufacturing firm COD emissions. We explore several potential mechanisms and find that the reduction effect was primarily driven by “higher-level government supervision” rather than “public supervision.” Heterogeneous analysis reveals significant effects only for firms facing high reduction pressure, low governance costs, weak local protection, and in heavy-polluting industries. Our findings provide insights into supplementing inadequate regulations with informal institutions to achieve environmental aims within a decentralized economy.