IntroductionThis study examines whether sustainability disclosure functions as an effective governance mechanism or instead serves as a symbolic tool that facilitates managerial opportunism in emerging market environments. Drawing on agency and legitimacy theories, it investigates the relationship between greenwashing, defined as the misalignment between sustainability disclosure and actual environmental performance, and earnings management.MethodsThe study uses panel data from non-financial firms listed on the Indonesian Stock Exchange over the 2020–2024 period, following the implementation of mandatory sustainability reporting requirements. Panel regression models with industry and year fixed effects are employed to control for sectoral and temporal heterogeneity.ResultsThe findings show that firms with higher levels of greenwashing are more likely to engage in both accrual-based and real earnings management, indicating that symbolic sustainability disclosure is associated with weaker financial reporting quality. Additional dynamic analyses and robustness tests, including lagged specifications and COVID-19-related analyses, confirm the consistency of the results.DiscussionThe evidence suggests that, in weak institutional environments, mandatory sustainability disclosure may function more as a legitimacy tool than as an effective monitoring mechanism. By distinguishing between substantive environmental performance and symbolic disclosure practices, this study raises concerns about the credibility and governance value of sustainability reporting in emerging economies.