Sustainability needs trust: The role of social trust in driving corporate ESG performance

Rui Fan, Yuxuan Xu, Liying Yu and Ran Qiu

Economic Analysis and Policy, 2025, vol. 86, issue C, 1492-1509

Abstract: We study whether greater social trust is associated with better corporate environment, social and governance (ESG) performance. Employing data from Chinese listed companies between 2010 and 2022, this study observes the significantly positive effect of social trust on ESG performance, and there exists a complementary effect between social trust and legal environment. Mechanism examination reveals that social trust promotes ESG by enhancing public environmental concern and improving corporate compliance. Heterogeneity analysis reveals that the positive impact of social trust is more pronounced in regions with strong Confucian cultural atmosphere, firms facing fierce industry competition, and firms with low internal control quality. Moreover, social trust can strengthen the company’s ability to acquire resources from stakeholders and inhibit ESG greenwashing, which further supports social norm and network theory. Our research enriches studies regarding drivers of ESG performance from the informal institutional perspective and provides references for regulators in terms of ESG construction.

Keywords: Social trust; ESG performance; Legal environment; Strategic motivation; ESG greenwashing (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:86:y:2025:i:c:p:1492-1509

DOI: 10.1016/j.eap.2025.05.007

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