In cultures where 'saving face' is a big deal, companies are way more likely to lie about their environmental record while actually doing a terrible job.
March 26, 2026
Original Paper
Saving Face or Sustainability? Face Culture and ESG Decoupling in China
SSRN · 6467380
The Takeaway
Researchers found that firms in these cultures use ESG reporting as a 'symbolic shield' to avoid public embarrassment. These companies disclose the most positive information but have the highest rates of real-world environmental controversies, showing that increased transparency can sometimes be used to effectively mask bad behavior.
From the abstract
This study examines how regional face culture influences firms’ environmental, social, and governance (ESG) decoupling—the gap between ESG disclosure and actual performance. We argue that face culture, centered on dignity and avoidance of embarrassment, motivates firms to use ESG reporting as symbolic impression management. Using 14,981 firm-year observations from Chinese listed firms during 2011–2022, we measure ESG decoupling as the difference between disclosure-based ESGtalk (Bloomberg) and i