Environmental Regulation and Corporate Environmental Performance: Evidence from Chinese Carbon Emission Trading Pilot

Abstract

Using archival data of the Chinese A-share listed companies from 2011 to 2019, this article empirically examines the effectiveness of the Chinese carbon emission trading pilot, from the perspective of market-ranked corporate environmental performance. The main findings demonstrate that compared with companies not selected in the pilot, regulated enterprises tend to create a better environmental performance after the implementation of the pilot. Second, regarding the two possible influential channels, the lowering production level channel is empirically supported, while the increasing green investment channel lacks salient explanatory power. Finally, greater environmental pressures and better internal control quality present synergistic effects in amplifying the positive connection between the pilot and corporate environmental performance. Our conclusions remain valid under various robustness test methods. Potential related directions for future research are also identified and suggested in this article. Overall, using the Chinese carbon emission trading pilot as a research setting, our study provides additional evidence on whether and how environmental regulations affect corporate environmental performance ranked by capital market participants.

Carbon reduction effect of ESG: empirical evidence from listed manufacturing companies in China

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“…The economic performance and social implications of ESG will be more apparent as Chinese companies increase their focus on it, which will help to improve their long-term competitiveness and reputation abroad. The "dual carbon" strategy and high-quality development goals of China are also closely aligned with ESG, which is a key factor in accelerating China's sustainable economic development and achieving the "carbon peak" and "carbon neutrality" targets (Yan et al, 2020;Li et al, 2023a;Zheng et al, 2023).…”

“…They not only measure corporate performance in environmental, social, and governance aspects but more importantly, they provide businesses with a clear direction to emphasize environmental protection and commitment to carbon reduction while pursuing economic benefits. On the one hand, ESG performance promote the operation of market incentive mechanisms, driving businesses to take the initiative in carbon reduction (Apergis et al, 2022;Wang et al, 2022;Zheng et al, 2023;Ren et al, 2023a). In the capital market, as investors increasingly focus on sustainable investments, companies with high ESG performance tend to attract more investments.…”

Efficiency of Low-Carbon Technologies Implementation at Non-Ferrous Metallurgy Enterprises under the Conditions of Carbon-Regulation Development in Russia

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