The interactive impact of green finance, ESG performance, and carbon neutrality

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China's progress towards carbon neutrality is closely linked to ESG (Environmental, Social, and Governance) principles and the advancement of green finance. However, the underlying mechanisms that drive this integration have not been fully explored. In an era marked by the urgent fight against climate change, understanding these mechanisms is crucial for creating a sustainable economic paradigm that aligns developmental goals with environmental commitments. This study uses data from 30 provinces in China from 2011 to 2020 to construct a two-way fixed effects panel regression model that examines the relationship between ESG performance and carbon neutrality, while also addressing concerns about endogeneity. By incorporating a moderation effect model, the study explores the influence of green finance on this interconnectedness. Additionally, it employs grouped regression models to analyze the differing impacts across regions and industries, and conducts robustness checks across different time frames. The findings highlight the significant inhibitory impact of ESG performance on carbon emission intensity, which is further mitigated by the substantial moderating effect of advancing green finance. Further analysis of heterogeneity reveals that the central and western regions, as well as less industrialized provinces, exhibit a stronger suppressive effect of ESG performance on carbon intensity, which is additionally moderated by the presence of green finance. This study provides new insights into the dynamic relationships between green finance, ESG performance, and carbon neutrality, offering strategic implications for corporations, policymakers, and investors.