As concerns over climate change and corporate greenwashing intensify, understanding how to ensure that firms “walk the talk” on environmental issues has never been more urgent. This study examines how societal norms (i.e. local climate belief) and formal regulatory interventions (i.e. California's cap-and-trade program) influence the extent to which firms align their environmental talk with substantive action. We find that strong local climate belief significantly reduces corporate environmental disconnect, highlighting the effectiveness of bottom-up, socially embedded pressure in fostering genuine corporate environmental responsibility. In contrast, we find that the implementation of California's cap-and-trade regulation unexpectedly widens the disconnect, suggesting that top-down policy interventions may unintentionally encourage symbolic compliance over substantive change. Further analyses reveal that the mitigating effect of climate belief is more pronounced in firms operating in competitive product markets, larger firms, and those with greater external monitoring. Our findings have important implications for regulators and investors seeking to promote authentic and active corporate responses to climate challenges.