Role of green bonds in developing ESG projects in Eastern provinces of China

Abstract

In today’s global economy, Environmental, Social, and Governance (ESG) investment exerts considerable influence, guiding investment decisions and corporate practices towards sustainability. This research explores the nexus between green bonds and ESG investment in China’s Eastern provinces, crucial for regional economic development and the shift towards sustainable growth. Examining data from 2015 to 2022 across 12 provinces reveals a significant finding: a 1% increase in green bonds correlates with a 0.33% increase in ESG investment, underscoring the pivotal role of green financing. While the size of financial markets and private investments shows minimal impact, economic growth demonstrates a positive association with ESG investment, reflecting a heightened awareness of sustainability. Conversely, deteriorating air quality reduces ESG investment due to increased environmental costs. To enhance ESG investment, effective policies should focus on expanding the green bonds market, improving transparency, fostering collaboration, implementing supportive regulations, and raising public awareness.