The impact of ESG responsibility performance on corporate resilience

Abstract

Against the backdrop of an increasingly complex and uncertain external corporate environment, how to quickly adjust and recover from external risk shocks and challenges by improving corporate environmental, social, and governance (ESG) responsibility performance has become key to achieving sustainable growth for companies today. Although emerging concepts, such as ESG and corporate resilience have received widespread societal attention, exactly how ESG responsibility performance can enhance development resilience has yet to be sufficiently explained. To this end, this paper explores the mechanisms and characteristics of corporate ESG responsibility performance on corporate resilience, using a sample of 4527 A-share listed companies selected for the ESG rating by China Securities from 2009 to 2021. The study finds that: Firstly, the better the ESG responsibility performance, the more resilient the companies; each unit increase in ESG rating increases the economic value added (EVA) rate of total assets by 0.63% and reduces the risk of corporate bankruptcy by 0.32%, thus increasing corporate resilience. In addition, all three ESG sub-indicators contribute to the improvement of corporate resilience, with corporate governance rating having a more significant impact on corporate resilience. Secondly, the mechanism analysis shows that the level of the investor interaction, intensity of strategy investment, and quality of the government–business relationship play a moderating role in the process of ESG responsibility performance affecting corporate resilience. Thirdly, certain heterogeneous characteristics of ESG responsibility performance affect corporate resilience. Fourthly, there is a lag in the impact of ESG responsibility performance on corporate resilience, with the impact largely disappearing after a four-period lag.