The environmental credit evaluation system is a key initiative for the deep integration of the construction of China's ecological civilization system and social credit system in the new era and thus optimizing the efficiency of resources allocation. This paper firstly explores the impact of the environmental credit evaluation system on the efficiency of corporate capital allocation, using empirical evidence from Shanghai and Shenzhen A-share heavy polluters over the period 2014—2020. It finds that underinvestment by firms with better environmental credit is significantly mitigated, while overinvestment by firms with poorer environmental credit is suppressed but not significant, suggesting that the optimizing effect of the environmental credit evaluation system on the efficiency of corporate capital allocation is only manifested in terms of underinvestment by firms. Secondly, the impact mechanism test finds that the mechanism of better environmental credit to alleviate corporate underinvestment lies in the play of the governance effect and the resources effect, with the governance effect manifested in increasing corporate risk-taking and the resources effect manifested in reducing corporate financing constraints, but not in increasing corporate government subsidies. Finally, the analysis of the internal and external environment finds that better environmental credit is more effective in mitigating corporate underinvestment when the information environment is poor and the governance environment is poor. The research conclusion reveals the effectiveness of the environmental credit evaluation system, providing useful decision-making references for continuously optimizing the environmental credit evaluation system to promote high-quality economic development during the 14th Five-Year-Plan period.