The Impact of Corporate ESG Performance on Green Innovation Efficiency —— Evidence from China

Abstract

Green innovation is essential for companies to meet their social obligations, drive industrial advancement, and improve market competitiveness. Good environmental, social, and governance (ESG) performance may increase corporate value and reputation, open up new business opportunities, lower risks, and drive green innovation. This study examines how ESG impacts corporate green innovation efficiency using sustainable development theory and stakeholder theory with a sample of Chinese A-share listed enterprises. Using a high-dimensional fixed-effects regression model, this paper investigates the impact of firms' ESG performance on green innovation efficiency and examines the mediating roles of corporate financial constraints and corporate social responsibility.. The findings indicate that strong corporate ESG performance improves corporate green innovation efficiency. Financing restrictions and corporate social responsibility also have a notable impact on the advancement of corporate green innovation efficiency. The findings of this paper support enhancing green innovation efficiency and achieving sustainable development.