Local green finance policies and corporate ESG performance

Abstract

Based on China's government‐business relations theory, we use difference‐in‐differences and causal forest to find that local green finance policies can significantly enhance corporate ESG performance especially for nonstate‐owned companies, companies with high levels of executive social capital, non‐heavily polluting companies, and companies in developed regions. We also find that the corporate financing constraint mitigation effect and the regional environmental regulation effect of local green finance policies are important mechanisms for promoting corporate ESG performance. Additionally, local green finance policies can strengthen the positive role of corporate ESG performance in enhancing corporate value, which is conducive to corporate sustainability.

Nonlinear effects of enterprise digital transformation on environmental, social and governance (ESG) performance: evidence from China

“…In the digital era, some literatures keep up with the development law of the times and carry out antecedents research on ESG performance from new digital perspectives such as digital economy (Chen et al , 2022), digital finance (Mu et al , 2023; Ren et al , 2023) and digital transformation. The development of urban digital economy and digital finance has a positive impact on improving Chinese enterprise ESG performance (Chen et al , 2022; Xue et al , 2023), and the enterprise digital transformation has a similar positive effect on ESG performance. The relaxed financing constraint environment will make the improvement of digital transformation on ESG performance more obvious (Yang and Han, 2023).…”

How does green credit guidelines affect environmentally friendly enterprises’ ESG? A quasi-natural experiment from China

“…Some scholars support Porter hypothesis (Porter and Van der Linde, 1995), which asserts that suitable environmental regulations can motivate enterprises to engage in innovation activities that enhance production efficiency as well as competitiveness [ 18 ], including Jaffe and Palmer (1997) [ 20 ], Ramanathan et al (2017) [ 21 ], Xue et al (2023) [ 5 ], Wang (2023) [ 22 ], Yu et al (2023) [ 23 ], Yan et al (2022) [ 14 ], Zhang et al (2021) [ 24 ], Zhang (2023b) [ 25 ], Xu et al (2023) [ 3 ], Li et al (2022b) [ 26 ], Chi and Yang (2023) [ 27 ], He et al (2024) [ 28 ], Zhang and He (2024) [ 29 ] and Wang et al (2023) [ 30 ]. For instance, Jaffe and Palmer (1997) found environmental compliance expenditure to be positively related to enterprises’ R&D spending [ 20 ].…”

“…Ramanathan et al (2017) determined that enterprises' private benefits from sustainability activities are generally better obtained through actively focusing on environmental regulations and environmental performance [21]. Zhang et al (2021) and Xue et al (2023) found that local the returns on high ESG portfolios green financial policies significantly increase corporate ESG performance [5,24]. Wang (2023) also showed that green finance policies are positively associated with environmentally friendly industries' green innovation efficiency [22].…”

“…As a critical indicator, ESG is commonly applied to evaluate enterprises’ sustainable development capacity. Therefore, scholars have dedicated considerable research to explore the potential determinants of ESG by examining the performance of enterprise (Lins et al, 2017; Giuli and Kostovetsky, 2014) [ 1 , 2 ], green finance (Xu et al, 2023; Zhang, 2023a; Xue et al, 2023) [ 3 – 5 ], corporate leadership (Dabbebi et al, 2022; Burke, 2021; Liu and Zhang, 2023; Ritz, 2022) [ 6 – 9 ], ownership (Rees and Rodionova, 2015; Nofsinger et al, 2019; Weber, 2014) [ 10 – 12 ], and environmental regulation (Chen et al, 2022; Yan et al, 2022; He et al, 2023; Shu and Tan, 2023; Lu and Cheng, 2023) [ 13 – 17 ]. Nonetheless, there is a lack of discussion remains regarding the relationship between the NIGCG and environmentally friendly enterprises’ ESG.…”

Non‐state shareholder governance and corporate sustainability: Evidence from environmental, social and governance ratings

“…Therefore, the impact of non-state shareholder governance on ESG ratings may differ significantly in different industries. According to the existence reference (Xue et al, 2023), we set a dummy variable of polluting that takes the value of 1 with firms in polluting industries and 0 otherwise. It can be seen from columns (1) and (3) in Panel A of Table 5, the coefficients of non-state shareholder governance are significantly positive when it is at the 1% and 5% level (coefficients = 0.129 and 0.046, respectively).…”