An Audit Governance Study of Green Financial Subsidies on ESG Greenwashing Behavior

Abstract

Green financial subsidies are an important policy tool to drive enterprises’ green transformation, but while incentivizing enterprises to increase environmental protection investment, they may also induce ESG “greenwashing” behaviors - enterprises create a green image through false or exaggerated ESG information disclosure In order to maintain the subsidy eligibility or obtain more resources. This paradox constitutes an important pitfall in the performance of green subsidy policies. From the perspective of audit governance, this paper systematically analyzes the theoretical logic of ESG “greening” induced by green subsidies, explains the logical basis of audit governance embedded in the relationship between green subsidies and ESG “greening”, and reveals the three major audit governance mechanisms: information authentication, supervision and accountability, and strategic orientation. The study explains the logical foundation of audit governance embedded in the relationship between green subsidies and ESG, reveals three audit governance mechanisms: information verification, supervision, accountability and strategic orientation, and constructs a full-chain audit governance framework from four aspects: audit of policy design, audit of subsidy allocation, audit of corporate behavior and audit of performance results. The study concludes that the audit governance of green financial subsidies should not be limited to the traditional review of financial compliance, but should be extended to the independent verification of the truthfulness of corporate ESG information disclosure and the dynamic assessment of the effectiveness of subsidy policies, so as to realize the paradigm upgrade from money management to efficiency management.