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How ESG promotes corporate low-carbon transformation: Evidence from China

Author

Listed:
  • Wang, Li
  • Zhou, Hanyu
  • Liao, Jing
  • Hong, Zhiwu

Abstract

Using a sample of China’s A-share listed companies from 2009 to 2020, this study constructs an innovative low-carbon transition index (ELCTI) that combines textual and economic information, and uses it to examine how ESG performance shapes firms’ low-carbon transition. The results show that ESG performance promotes ELCTI through supervision, reputation, and governance mechanisms. This effect varies systematically across firm characteristics, industries, and regions, and is particularly pronounced in state-owned enterprises, low-attention industries, and pilot regions implementing low-carbon policies. This study provides a forward-looking and objective measure of low-carbon transition by combining qualitative textual information with quantitative structural data. It underscores the importance of strengthening ESG disclosure for corporate environmental governance. Such efforts can accelerate the low-carbon transition of firms and contribute to broader national climate objectives, including China’s targets of peaking carbon emissions and achieving net-zero emissions.

Suggested Citation

  • Wang, Li & Zhou, Hanyu & Liao, Jing & Hong, Zhiwu, 2026. "How ESG promotes corporate low-carbon transformation: Evidence from China," Economic Modelling, Elsevier, vol. 162(C).
    • Handle: RePEc:eee:ecmode:v:162:y:2026:i:c:s0264999326001896
    DOI: 10.1016/j.econmod.2026.107660
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    Keywords

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    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis

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