This research uses 10,607 observations from China A-listing firms’ data between 2009 and 2023. We construct a peer relative greenwashing measure based on the standardised gap between industry-normalised ESG disclosure and ESG performance scores. The baseline models are estimated using OLS regressions with firm-year-clustered standard errors and industry and year fixed effects. Robustness tests include the instrumental variable method, lagged specifications, and PSMDID. The study extends the greenwashing literature by linking ESG misrepresentation to core internal financial policy decisions and offers new insights into the financial consequences of symbolic sustainability practices. Research has found that corporate greenwashing significantly impacts the tone of their annual reports: the higher the degree of greenwashing, the less optimistic the tone of the annual report. Simultaneously, greenwashing also significantly reduces abnormal tones. This means that when greenwashing, companies are not using exaggeratedly positive language to "embellish" their statements; instead, they deliberately tone down their statements, reduce overly optimistic expressions, and adopt defensive disclosure strategies to evade censorship and investor whistleblowing.