Sustainability fraud refers to fraud and misconduct committed with sustainability data. As stakeholder pressure to protect the environment grows dramatically, so does sustainability fraud. In this paper, we use the organizational ecology perspective and explore the liability of newness and the liability of foreignness in containing sustainability fraud in China and their contingencies. Utilizing data from the Ministry of Ecology and Environment of China alongside various public databases, we fitted a regression model of 220 firms. Our result reveals that the likelihood of sustainability fraud increases with firm age, while foreign firms are less prone to such misconduct. Additionally, state supervision diminishes differences in fraud likelihood between foreign and local firms, and between new and established firms. Similarly, local economic development diminishes differences between foreign and local firms. This research contributes to the Sustainable Operations and Supply Chain Management literature by examining factors impacting sustainability fraud. It also extends organizational ecology concepts to environmental misconduct. Lastly, the study explores the moderating roles of state control and local economic conditions.
