Environmental Regulation, Corporate ESG Environmental Performance and the Mediating Role of Green Innovation: Evidence From China

Against the background of green and sustainable development strategy, it is an effective way to carry out green innovation to cope with the increasing intensity of government environmental regulation for enterprises. Nevertheless, the regulatory role of ESG performance has been ignored. Based on panel data from Chinese listed companies from 2010 to 2019, this paper mainly studies whether the environmental regulation intensity and ESG performance have a substitution effect on the impact of green innovation by constructing a double fixed effect model. The empirical results showed that first, positive ESG performance is conducive to promoting green innovation. Second, there is a U-shaped relationship between the intensity of environmental regulation and high-quality green innovation, which reflects the effect of “offset before compensation”. With the increasing intensity of environmental regulation, high-quality green innovation tends to crowd out low-quality green innovation, which further improves the practical test of the “Porter Hypothesis”. Third, the positive ESG performance showed a negative regulatory effect between environmental regulation intensity and enterprise green innovation, which means that environmental regulation intensity and ESG performance have a substitution effect, and the effect is heterogeneous in different enterprises. This paper makes a beneficial exploration on how environmental regulation intensity and ESG performance affect enterprise green innovation, and demonstrates the regulatory role of ESG performance between environmental regulation intensity and green innovation, which reveals the impact of macro environmental policies on the green innovation behavior of micro subjects, and contributes to the further improvement of ESG concept and green innovation theory.

With the establishment of China’s “dual carbon” target and the promotion of high-quality development strategy, the role of green innovation has become increasingly important. Corporate ESG innovation, as a guiding principle for companies to practice sustainable development and an important signal for evaluating their environmental and social responsibilities as well as corporate governance level, deserves in-depth research on its impact on green innovation performance. This paper empirically analyzes the green innovation effect of corporate ESG (Environmental, Social and Governance) performance using Chinese A-share listed companies as a sample from 2009 to 2021. The research shows that corporate ESG performance can enhance green innovation performance. Mechanism analysis reveals that ESG performance mainly improves green innovation performance by alleviating financing constraints and enhancing human capital. Further research shows that all three sub-dimensions of ESG performance contribute to improving green innovation performance, with the strongest effect observed in corporate governance performance. ESG performance not only enhances strategic green innovation performance and independent green innovation performance but also improves substantial green innovation performance and collaborative green innovation performance. Therefore, the government should improve the ESG information disclosure system, increase support for companies with excellent ESG performance, and improve local talent policies to attract high-quality green innovation talents. Investors should incorporate ESG performance into their decision-making and strengthen the identification and use of ESG information. Companies should formulate ESG strategies, increase relevant investments, prioritize corporate governance improvement, and enhance the quality of ESG information disclosure through various means.

Purpose This study aims to investigate how environmental, social and governance (ESG) performance affects corporate competitiveness, the mechanisms underlying these effects and how industry competition and media attention influence the relationship between ESG performance and competitiveness. Design/methodology/approach Using a sample of Chinese A-share listed companies from 2010 to 2022, the authors perform three distinct analyses: first, whether ESG performance enhances competitiveness; second, whether green innovation mediates the relationship between ESG performance and competitiveness; and third, how industry competition and media attention moderate the connection between ESG performance and competitiveness. Findings The results demonstrate that enhanced competitiveness correlates with improved ESG performance, and ESG performance boosts competitiveness through heightened green innovation. Moreover, media attention and industry competition amplify the positive effects of ESG performance on competitiveness. Research limitations/implications The study’s findings may not generalize to other developing countries, owing to imprecise measurement standards for green innovation and ESG performance and insufficient exploration of interactions between the two mechanisms. Originality/value This study examines how ESG performance influences nonfinancial outcomes such as corporate competitiveness, expanding research beyond financial effects. It elucidates the transmission mechanism of competitiveness enhancement, providing empirical support for sustainable development strategies. Additionally, it explores the moderating roles of media attention and industry competition in the ESG performance-competitiveness relationship, addressing current research gaps.

To address escalating environmental challenges and the energy crisis, traditional energy companies must initiate green transformations and enhance green innovation. ESG (Environmental, Social, and Governance) performance is vital for gauging enterprises’ sustainable development. Therefore, this study explores the relationship between the ESG performance of traditional energy companies and their extent of green innovation. It aims to investigate whether improving ESG performance can lead to enhanced green innovation within these companies. Therefore, this paper employs a fixed effect model to analyze the impact of ESG performance on green innovation among traditional energy companies, specifically focusing on those listed in the Chinese A-share market from 2013 to 2022. The results indicate that ESG performance significantly promotes green innovation within traditional energy companies. The mechanism test’s findings reveal that ESG performance impacts green innovation via three key pathways: innovation investment, external monitoring, and government subsidies. Furthermore, further analysis reveals that the intense market competition environment positively moderates the effect of ESG performance enhancement on the extent of green innovation. This implies that, by improving their ESG performance, traditional energy companies can enhance their green innovation and green transformation efforts. Moreover, this impact is particularly pronounced among state-owned enterprises.

Analyses in the fields of environmental and innovation research have hindered our understanding of the real effects of external drivers of firms' green innovation and sustainability behaviors on financial performance. This study compares the ways in which two different external factors drive firms to be green innovative: environmental regulation and market turbulence. By dividing green innovation into green process innovation and green product innovation, we propose that environmental regulation increases financial performance mainly through green process innovation rather than through green product innovation, and market turbulence affects financial performance mainly through green product innovation rather than through green process innovation. The results of an empirical analysis based on a mediation model and panel data on 472 Chinese listed firms for 2006–2017 lend support to our hypotheses. Our study contributes to the green innovation management and sustainability literature by offering a holistic framework for examining how firms pursue green innovation and sustainability in response to two different forms of external pressure.

Environmental protection tax is levied based on various types of emitted pollutants and has a significant impact on the green behaviors and ESG (environmental, social, and corporate governance) performance of enterprises. This article explores the green effect and the impact of environmental protection tax on the green behavior of listed companies with in-depth empirical analysis based on the data of industrial enterprises listed on the A-shares from 2018 to 2022 in China. Research has found that the implementation of environmental protection tax has played a significant driving role in improving the overall performance level of corporate ESG, and this tax system has formed a driving force mechanism for enterprises to increase investment in green innovation and effectively improve their comprehensive ESG performance. Green innovation plays a significant intermediary role between environmental protection tax and corporate ESG performance. It is suggested that regions should adjust the applicable amount of environmental protection tax, increase green innovation, and standardize pollution control and emission reduction regulations.

Environmental regulation and green innovation are two main fulcrums in the realization of green transition of industrial growth. However, few studies have done an empirical analysis of the impact of environmental regulation and green innovation on green development. Based on the theory of systematic interduality, regional industrial green development is regarded as a dynamic system composed of two subsystems: the state and the process subsystem. Using provincial industrial panel data from 2007–2015 and the spatial Durbin model under the unified analysis framework, this paper examines the role and mechanism of environmental regulation (divided into administrative environmental regulation, market-based environmental regulation, and public participation environmental regulation) in the impact of green innovation (divided into green product innovation and green craft innovation) on industrial green development. The results indicate a sharp fluctuating trend in China’s overall industrial green development performance, and that China’s 30 provinces can be divided into four categories, based on the development levels of two subsystems of industrial green development. There is a clear positive spatial correlation between the industrial green development performance in different provinces. Considering the impact of environmental regulation on industrial green development performance, different types of environmental regulation have different regional influences. Considering the impact of green innovation on industrial green development performance, in the absence of environmental regulation constraints, green product innovation shows a certain promotional role, and green craft innovation has a significant inhibitory effect. However, under environmental regulation constraints, market-based environmental regulation through the encouragement of green craft innovation rather than green product innovation achieves a positive impact on industrial green development.

Company's digital transformation and Environmental, social, and governance (ESG) performance are crucial for their development, but there is little literature that considers whether and how digital transformation improve ESG performance, the impact of environmental regulations is also easily overlooked, we attempt to fill this gap. Based on data related to Chinese listed enterprises from 2011 to 2020, we focus on the internal digital transformation of enterprises, analyze and empirically test the direct and mediating influence of digital transformation on enterprises' ESG performance, as well as the moderating effect of external environmental regulations. The results show that digital transformation improves ESG performance. Heterogeneity analysis found that digital transformation had different impacts on different dimensions of enterprise ESG performance. Further analysis indicates that enterprises' green innovation and labor demand play a mediating role in the relationship between enterprises' digital transformation and ESG performance. Regional formal environmental regulation and informal environmental regulation moderates the path of firms' digital transformation promoting green innovation level to enhance ESG performance. This paper provides micro evidence in China for exploring the improvement of enterprises' ESG performance and provides relevant ideas for understanding the effect of digital transformation.

In today's globalized business landscape, a corporation's Environmental, Social, and Governance (ESG) performance has become a crucial metric for overall sustainability. This study delves into the empirical analysis of the connection between corporate ESG performance and economic performance, with a focus on the role of green innovation. Green innovation, a vital component of ESG, encompasses activities aimed at reducing environmental impact and improving resource efficiency. The study aims to unravel the internal mechanisms and influence paths of this relationship. The literature on the correlation between ESG performance and economic performance presents divergent perspectives. While some assert a positive link, contending that robust ESG performance enhances corporate reputation and operational efficiency, others argue that investing in ESG activities may raise costs and impact short-term financial performance. Through an analysis of publicly available corporate data, this study explores how green innovation, within the realm of ESG, shapes corporate economic performance. Factors such as corporate size and market environment are considered to ensure comprehensive applicability and profound insights. The study seeks to provide practical guidance for corporations in navigating the intricate balance between ESG responsibilities and economic objectives. Additionally, it aims to furnish policymakers with valuable recommendations to foster green innovation. Ultimately, by unraveling these complex relationships, the study endeavors to contribute to a deeper understanding of the interplay between ESG and economic performance, offering insights that can inform strategic decisions for both corporations and policymakers.

Purpose ESG performance is a measure of how well a company manages and optimises its impact on various environmental, social and governance factors. In addition, ESG serves as a significant catalyst for changing and improving economic structures, as well as promoting national economic development. The purpose of this study is to investigate the mediating role of green innovation in the relationship between ESG performance and company value, using companies listed on the Indonesia Stock Exchange. Design/methodology/approach Panel data were collected from 64 companies during the period 2018–2023. Hayes’ Method No. 4 was used for mediation analysis. Findings The findings show that ESG performance has a significant effect on green innovation and firm value. This indicates that ESG performance can encourage companies to innovate in an environmentally friendly manner and also increase company value. Other findings also provide evidence that green innovation has a negative effect on company value. This means that green innovation in the short term cannot have a maximum effect on company value. However, additional analysis using the Hayes process shows that green innovation can mediate the relationship between ESG performance and company value. Research limitations/implications The number of observations is still relatively limited, from companies listed on the Indonesian stock exchange. The total number of samples used in this study is 384 company-year observations. Practical implications Investment in companies that integrate environmental sustainability aspects into the manufacturing value chain, such as green innovation, is considered an added value that will increase investor welfare. Originality/value This study links ESG performance and green innovation to company value in the context of the Indonesian market, which is underrepresented in international literature.

From Covid-19 to conflict: Does environmental regulation and green innovation improve industrial sector decarbonization efforts and environmental management?

This study aims to analyze the impact of digital transformation and green innovation technology on the environmental, social and governance (ESG) performance of new energy companies based on a benchmark regression model. Based on the data of 552 new energy listed firms in China's Shanghai and Shenzhen markets between 2013 and 2023, this paper uses a benchmark regression model to conduct an empirical analysis to explore how digital transformation promotes firms' ESG performance and to examine the mediating role of green technology innovation in it. By examining whether new energy firms undergoing digital transformation can promote corporate ESG performance, the results show that digital transformation significantly enhances the ESG performance of new energy firms, a finding that still holds after the robustness test. In addition, digital transformation further enhances firms' ESG performance by accelerating green technology innovation.

Corporate ESG ratings are crucial for China's enterprises pursuing green transformation and the "Dual Carbon" goal. Using a sample of China's A-share listed companies from 2009 to 2022, this study investigates the impact of ESG performance on stock price synchronization. It also explores the mediating role of substantive green innovation. Results show that good ESG performance positively influences stock price synchronization. Specifically, ESG performance promotes substantive green innovation, which enhances stock price synchronization. Additionally, the study finds significant effects in the eastern region and high-tech industries. This research supports firms in improving ESG performance and engaging in green innovation, contributing to stock price stability.

Green innovation is an important driver for enterprises to realize sustainable development, but there are “double externalities” of environmental protection and knowledge spillovers. The climate policy uncertainty is a “driver” for corporate green innovation, or a “barrier” hindering corporate green innovation. Existing literature has explored the relationship between the two based on specific industries, but no consistent conclusions have been reached. This article uses study employs data from 3,763 publicly listed companies in China from 2010 to 2020 as an empirical research sample to analyze examine the actual impact of climate policy uncertainty on corporate green innovation and its underlying mechanisms. It further examines the effects of climate policy uncertainty on different types of green innovation activities and the moderating effect of corporate social responsibility. The study finds that climate policy uncertainty can promote corporate green innovation, primarily through channels such as enhancing environmental regulation. Both corporate social responsibility and ESG performance have a positive moderating effect on the relationship between climate policy uncertainty and corporate green innovation. Heterogeneity analysis reveals that climate policy uncertainty can foster green innovation in state-owned enterprises, large enterprises, companies in eastern regions, and those in areas with lower levels of green finance development further research indicates that from the perspective of green innovation motivation, climate policy uncertainty promotes strategic green innovation but does not have a significant effect on substantive green innovation. The findings of this study provide a theoretical foundation and practical insights for the government in formulating relevant climate policies and promoting green innovation in enterprises.

With the intensification of global environmental challenges and the growing demand for sustainable agricultural transformation, understanding how environmental regulation shapes enterprise innovation has become increasingly important. This study examines the impact of command-and-control environmental regulation on green innovation in agricultural enterprises using panel data from agriculture-related enterprises listed on the Shanghai and Shenzhen A-share exchanges. The analysis focuses on the period 2012–2021, which is characterised by relatively stable environmental regulation and reliable data, providing a consistent empirical context for assessing the effects of command-and-control environmental regulation. By analyzing the characteristics of command-and-control environmental regulation and green innovation in agricultural enterprises, this research constructs and estimates a two-way fixed effects model, a moderating effects model, a mediating effects model, and a spatial Durbin model to explore both direct and spillover effects. The empirical results show that the following findings: (1) Command-and-control environmental regulation significantly promotes green innovation in agricultural enterprises, and this effect remains robust across alternative measurements and model specifications. (2) Heterogeneity analysis indicates that the direct effect of command-and-control environmental regulation is most pronounced in eastern regions, non-state-owned enterprises, and enterprises with weaker environmental, social, and governance performance. (3) Moderation analysis shows that agricultural industrial coordination and executive green cognition significantly strengthen the positive relationship between command-and-control environmental regulation and green innovation in agricultural enterprises. (4) Mediation analysis demonstrates that green management costs serve as a partial mediator in this relationship. (5) Spatial analysis reveals that spatial correlation patterns are evolving over time, with significant positive spillover effects observed among geographically and economically adjacent regions. The findings provide theoretical and empirical evidence to inform the design of coordinated environmental regulation frameworks that effectively stimulate green innovation and foster sustainable agricultural development.