Green investments and their effect on ESG ratings: An empirical analysis of Chinese publicly traded companies

Bo Hou, Wenhui Huang, Xiji Wang and Jizhou Wang

Research in International Business and Finance, 2025, vol. 74, issue C

Abstract: The effect of green investments on the Environmental, Social, and Governance (ESG) ratings of Chinese publicly listed corporations is investigated in this research. We investigate the differences in ESG performance between state-owned companies (SOEs) and non-state-owned enterprises (NSOEs) using data covering 2009–2023 using a Linear mixed-effect model. Our results reveal that, especially in NSOEs, green investments greatly improve the environmental and social elements of ESG ratings; SOEs exhibit better governance ratings as a result of these investments. The study also emphasizes how diverse the ownership structure affects ESG ratings, thereby reflecting distinct strategic goals and regulatory effects. The findings imply that adopting green investments not only raises ESG ratings but also helps to lower environmental risks and enhance stakeholder interactions, thereby supporting the dual benefits of sustainability practices. Policymakers should take into account using incentives that promote long-term sustainability objectives, including tax exemptions or subsidies for businesses embracing environmentally friendly practices, thereby improving the effect of green investments.

Keywords: Green Investment; Environment; Social; Governance; China; State-owned enterprises (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:74:y:2025:i:c:s027553192400463x

DOI: 10.1016/j.ribaf.2024.102670

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