ESG rating events, party leadership, and green innovation

Xiaoyi Wang and Magdaraog Gualberto

Innovation and Green Development, 2024, vol. 3, issue 4

Abstract: Under the dual-carbon goal, societal focus has shifted to corporate environmental, social, and governance (ESG) rating outcomes and their role in sustainability. China’ s ESG sector is nascent, with sparse research on the links between ESG ratings, CPC organizational governance, and green innovation. This research utilizes a dataset of all A-share state-owned listed firms between 2010 and 2020 to examine the effect of activities for ESG rating outcomes on green innovation. Additionally, it examines the moderating effect of CPC organizational governance. Our findings suggest that ESG ratings act as an impetus for enterprises to engage in green innovation, with CPC organizational governance playing a supportive role in this dynamic. We adopt several methods to address endogeneity concerns and find our results robust. Furthermore, we note the beneficial impacts of ESG rating outcomes on green innovation activities are directly related to a firm's performance pressure and a low level of marketization. Finally, we find that corporate ESG performance, compared to strategic green innovation, will encourage substantive green innovation. The research guides policy to enhance ESG implementation in Chinese SOEs, underscoring the CPC’ s governance support and the importance of specific actions to optimize environmental gains from ESG activities.

Keywords: Corporate ESG rating events; CPC’ s organizational governance; Green innovation (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ingrde:v:3:y:2024:i:4:s2949753124000535

DOI: 10.1016/j.igd.2024.100176

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