What Are the Key Influencing Factors of ESG? Empirical Research Based on Chinese Listed Companies

Abstract

This study explores the impact of company financial indicators on the environmental, social and governance (ESG) scores of listed companies in China using a fixed-effects panel regression model. I found that companys total assets and number of employees are significantly and positively related to ESG scores, and that there may be a nonlinear relationship between the number of employees and ESG scores. In addition, current ratio has no significant effect in terms of ESG score. Debt-to-asset ratio was significantly negatively related to ESG score, while ROE and operating profit margin were significantly positively related to ESG score. The results suggest that different financial indicators may have different roles in predicting CSR fulfillment. Future research could delve into industry and regional differences, as well as other factors that influence the relationship between financial indicators and ESG scores.