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Keywords

ESG performance;enterprise value; financial constraints; technology innovation

Abstract

Following the successful convening of the 20th National Congress of the Communist Party of China, the country is actively formulating new development strategies and striving to promote green development. The concept of green and sustainable development has once again become a focal point of attention in China. ESG (Environmental, Social, and Governance) is considered a core non-financial evaluation criterion for assessing a company’s performance in these areas. It provides critical support for enterprises to achieve dual carbon goals and sustainable development. This study selects A-share listed companies in China from 2013 to 2022 as research samples and empirically examines the impact of corporate ESG performance on corporate value. The results show that good ESG performance has a significant positive effect on improving corporate value. Further research reveals that ESG performance not only alleviates financing constraints but also enhances corporate innovation capabilities, making positive contributions to the profitability of listed companies. Additionally, digital transformation can improve corporate ESG performance, thereby increasing corporate value. The positive impact of ESG performance on corporate value is influenced by factors such as geographical location, industry nature, and the degree of marketization. In recent years, as the Chinese government has placed increasing emphasis on green and sustainable development, ESG performance has become a vital metric for evaluating corporate responsibility and long-term viability. Companies with robust ESG practices are better positioned to manage risks, improve operational efficiency, and build stronger stakeholder relationships. These advantages are transferred into enhanced corporate reputation, better access to capital, and potentially higher market valuations. The study’s findings suggest that companies with superior ESG performance experience reduced financing constraints. This is because investors and financial institutions are increasingly favoring companies that demonstrate responsible environmental and social practices. Such companies are perceived to have lower risk profiles and greater long-term growth potential. As a result, they may benefit from lower borrowing costs and greater investment opportunities, which in turn enhance their financial stability and corporate value. Moreover, the research indicates that strong ESG performance fosters innovation within companies. By prioritizing sustainable practices and social responsibility, companies are encouraged to adopt new technologies and processes that reduce environmental impact and improve social outcomes. This innovative approach not only drives efficiency and cost savings but also opens up new market opportunities and competitive advantages. Digital transformation emerges as a crucial factor in amplifying the benefits of ESG performance. Companies that embrace digital technologies can better monitor and manage their environmental and social impacts, leading to more transparent and effective ESG practices. Digital tools enable companies to track their sustainability metrics, report on their progress, and engage with stakeholders more effectively. Consequently, digital transformation acts as a catalyst for enhancing ESG performance and, subsequently, corporate value. The study also highlights the variability of ESG impacts across different contexts. Factors such as geographical location, industry characteristics, and marketization levels play significant roles in shaping the relationship between ESG performance and corporate value. For instance, companies in regions with stringent environmental regulations may experience greater benefits from strong ESG practices. Similarly, industries that are inherently high-risk or have substantial environmental impacts might see more pronounced effects of ESG performance on corporate value. In conclusion, this research provides valuable insights for listed companies looking to optimize their ESG performance. It underscores the importance of integrating ESG considerations into corporate strategies to achieve sustainable growth and enhance value. Furthermore, the study offers theoretical support and practical recommendations for regulatory bodies to strengthen ESG oversight and promote a more sustainable and responsible corporate landscape in China. By fostering a culture of transparency, accountability, and innovation, companies can better navigate the challenges of the modern business environment and contribute to the broader goals of sustainable development.

DOI

10.16315/j.stm.2024.04.007

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