Merging Economic Aspirations with Sustainability: ESG and the Evolution of the Corporate Development Paradigm in China

Abstract

Amid the push for sustainable and high-quality development, corporate environmental, social, and governance (ESG) performance has garnered increasing attention from stakeholders. This empirical study uses a 2009–2022 panel of 1264 A-share-listed companies to examine the impact of ESG performance on corporate sustainability paths and to identify the channels through which this impact operates. Ordinary least squares estimates show that stronger ESG performance is associated with significantly higher total factor productivity, and the effect is more pronounced in heavy-polluting industries. Mechanism tests indicate that ESG disclosure mediates this relationship, with its influence emerging over time and strengthening in subsequent years. The mediation also varies across ESG pillars, with social disclosure exerting the most decisive influence. These findings provide actionable insights—both motivating managers to strengthen their ESG engagement and informing policymakers as they seek to refine regulatory frameworks. By highlighting the value-creating role of ESG in aligning growth with sustainability, this study offers a novel perspective on corporate transformation within the context of a rapidly evolving economic landscape.