Green Financial Reform and Corporate ESG Performance in China: Empirical Evidence from the Green Financial Reform and Innovation Pilot Zone

Zhao Chen, Ling Hu, Xin He (), Ziming Liu, Danni Chen and Weirui Wang
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Zhao Chen: School of Economics and Trade, Guangdong University of Foreign Studies, Guangzhou 510006, China
Ling Hu: School of Economics and Trade, Guangdong University of Foreign Studies, Guangzhou 510006, China
Xin He: School of Finance, Jiangxi University of Finance and Economics, Nanchang 330013, China
Ziming Liu: School of Economics, Jinan University, Guangzhou 510630, China
Danni Chen: School of Finance, Jiangxi University of Finance and Economics, Nanchang 330013, China
Weirui Wang: Carey Business School, Johns Hopkins University, Baltimore, MD 21201, USA

IJERPH, 2022, vol. 19, issue 22, 1-17

Abstract: Does the establishment of pilot zones for green finance reform and innovations in 2017 have an impact on the Environment, Social and Governance (ESG) scores of enterprises? This paper selects data from Chinese A-share listed companies from 2014–2020 and uses the differences-in-differences (DID) model to analyze the impact of green financial reform on the ESG scores of enterprises. The study shows that the establishment of the Green Financial Reform and Innovation Pilot Zone (GFPZ) policy helps enterprises to obtain higher ESG scores through environmental, social and governance mechanisms. When ESG is measured using environmental, social and governance data, our results suggest that the contribution of green finance reforms to ESG scores is primarily driven by social responsibility scores. The adjustment effect analysis shows that for large enterprises in the GFPZ, the above effects have stronger influence, but there is no significant difference between heavily polluting and non-heavily polluting firms in the GFPZ. Expansive analysis shows that the improvement in ESG scores of enterprises in the GFPZ not only contributes to the green performance of enterprises, but also to their financial performance.

Keywords: green financial reform; corporate ESG; green development; environmental mechanism; social mechanism and governance mechanism; green spillover (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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