Research on the impact of ESG performance on carbon emissions from the perspective of green credit

Abstract

Utilizing panel data from 30 Chinese provinces, this research examines the non-linear relationship between regional environmental, social, and governance (ESG) performance and carbon emissions (CE) from the viewpoint of green credit. The study reveals a single threshold effect between ESG performance and CE, with green credit acting as the threshold variable. When the amount of green credit in a region exceeds the threshold, the growth rate of CE in that region begins to decline with higher ESG scores. Furthermore, green credit acts as a catalyst, playing a negative moderating role between ESG performance and CE, validated by both threshold regression and fixed effects models on panel data. Green credit indirectly influences carbon emissions by supporting green innovation, thus facilitating the transition to a greener economic development framework. Lastly, regional disparities are found in the moderating influence of green credit between ESG performance and CE. In regions with high ESG performance, the moderating impact of green credit is smaller, while in regions with low ESG performance, the effect is more significant. The research findings offer theoretical backing for policymakers regarding the efficacy of ESG in achieving carbon neutrality objectives, and offer valuable strategic recommendations for the diversified formulation of green credit strategies on both national and provincial scales. Regional heterogeneity test results provide valuable support for formulating policies that encourage green credit in provinces with low ESG performance.