The effect of environmental credit rating on enterprise green development

Yebin Wang, Ran Cui, Xiaodan Mao, Xiaoxiao Lu, Yinchang Li and Yue Huang

International Review of Financial Analysis, 2025, vol. 101, issue C

Abstract: As a new environmental regulatory tool, can the environmental credit rating system help enterprises achieve green development goals through credit mechanisms? Based on the implementation of China's environmental credit rating policy, this study examines the system's impact on enterprise green development (EGD) and its mechanism using a staggered difference-in-differences method. The results show that the environmental credit rating significantly promotes green development in enterprises, with multidimensional robustness further confirming this conclusion. Additionally, we identify two primary mechanisms driving this enhancement: internal and external forces. Internal driving mechanisms include increasing environmental investment, enhancing green innovation, and reducing energy consumption, while external driving mechanisms include government incentives, investor attention, and public attention. In addition, the study finds that the environmental credit evaluation system has a more significant incentive effect on mature enterprises, enterprises facing strong environmental regulations, those with high financing constraints, a high level of green awareness, and those located in the more economically developed eastern regions. This study provides a theoretical basis for optimizing environmental policy design and implementation to promote higher-quality green transformation in enterprises.

Keywords: Environmental credit rating; Enterprise green development; Staggered difference-in-differences method; Internal driving mechanism; External driving mechanism (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:101:y:2025:i:c:s1057521925001255

DOI: 10.1016/j.irfa.2025.104038

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