Research On The Impact Of Environmental,social And Corporate Governance(esg)on Corporate Green Innovation

The report of the 20 th National Congress of the Communist Party of China pointed out that it is necessary to firmly establish and practice the concept that lucid waters and lush mountains are golden mountains and silver mountains,and actively promote the sustainable development of harmonious coexistence between man and nature.In this regard,green innovation is a key way for firms to establish competitive advantage and contribute to sustainable development,but it often suffers from financing constraints.Scholars have been raising the need for stakeholder governance to correct the imbalance between supply and demand of depleting resources.In this regard,environmental,social,and governance(ESG)practices allow firms to have a wider investor base,face lower risk,and generate positive market reactions,ultimately leading to a lower cost of capital,which may potentially alleviate financing constraints and provide strong motivation for green innovation.Combining stakeholder theory with the resource-based view(RBV),this study investigated how ESG substantially affects corporate green innovation.Based on a zero-inflated Poisson regression analysis of 1577 listed Chinese manufacturing firms,we found that better ESG could significantly induce better corporate green innovation,and financing constraints acted as a mediator in the relationship between ESG and green innovation.Moreover,our results also show that when facing financing constraints,corporates with lower R&D intensity,fewer insider holdings and good past financial performance or state-owned corporates can better carry out green innovation with better ESG performance.In the context of sustainable development,this study investigates the impact of ESG on green innovation in the acquisition of external resources,and extends the literature on corporate pro-social decision makings in three key areas.First,it provides support for combining stakeholder theory with RBV in the context of green innovation.Second,we revealed the mechanisms by which internalizing ESG into corporate financing could drive corporate green innovation.Third,we also make contributions to green development studies on emerging economies.This study also has important guidance and practical implications.The results highlighted ESG’s crucial role in corporate green innovation,which can broaden practitioners’ perspectives on green innovation in terms of access to external resources.Firms should aim to deepen their understanding of ESG concepts in their daily operations to improve their ESG performance.They should reshape the corporate green innovation process based on ESG concepts to improve competitiveness and achieve sustainable development.Meanwhile,Chinese ESG rating agencies should continue to strengthen two-way communication with mature international ESG rating agencies and promote the establishment of an ESG evaluation system that is internationally compatible and conforms to national conditions to better reflect the true ESG situation of firms.Furthermore,investment institutions should implement responsible investment based on ESG concepts and act as external regulators of firms to promote corporate sustainable development.In addition,the Chinese government should gradually improve ESG policies and regulations,and effectively guide analysts,investors and other stakeholders to participate in green and low-carbon production and life in order to provide more efficient financial services in sustainable areas such as green innovation.