Market-based environmental regulation and corporate ESG performance: Evidence from China

Minjuan Chen, Honglin Chen, Siying Liu and Yanping Liu

Economic Analysis and Policy, 2025, vol. 87, issue C, 2006-2022

Abstract: As a new type of market-based environmental regulation, the carbon emissions trading pilot policy is a critical tool to help China achieve sustainable development. Using panel data of Chinese A-share listed companies from 2006 to 2020, this paper employs a staggered difference-in-differences (DID) model and finds that the carbon emissions trading pilot policy positively influences the ESG performance of enterprises in the pilot regions. This effect is driven by promoting green innovation and public environmental awareness. Additionally, it is observed that customer concentration plays a positive moderating role in this process. Through group-wise regression analysis, we further discover that for state-owned enterprises, enterprises in highly regulated industries, and those located in regions with advanced digital economy development, the positive effect of this pilot policy is enhanced by at least 26 %.

Keywords: Carbon emissions trading; ESG performance; R&D investments; Green innovations; Public environmental awareness (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:87:y:2025:i:c:p:2006-2022

DOI: 10.1016/j.eap.2025.08.002

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