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Climate-Resilient City Construction and Firms’ ESG Performance: Mechanism Analysis and Empirical Tests

Author

Listed:
  • Mo Zhou

    (Alliance Manchester Business School, The University of Manchester, Manchester M13 9PL, UK)

  • Kaihua Bao

    (Industrial Economics Research Institute, Research Institute of Machinery Industry Economic & Management, Beijing 100055, China)

  • Xiliang Hu

    (The School of Finance, Hunan University of Technology and Business, Changsha 410205, China)

  • Chen Gao

    (The School of Finance, Hunan University of Technology and Business, Changsha 410205, China)

  • Ya Wen

    (The Business School, Hunan First Normal University, Changsha 410205, China)

  • Ting Zhang

    (Industrial Economics Research Institute, Research Institute of Machinery Industry Economic & Management, Beijing 100055, China)

Abstract

This study investigates how climate-resilient city construction (CRCC) influences the Environmental, Social, and Governance (ESG) performance of Chinese listed firms, employing a difference-in-differences (DID) model with firm-year data from 2012 to 2023. The empirical results demonstrate that CRCC exerts a significant positive effect on firms’ ESG performance, with particularly pronounced improvements in the environmental and social dimensions. The mechanism analysis reveals that strengthening government environmental guidance and stimulating firms’ environmental response strategies are the key channels via which CRCC improves firms’ ESG performance. The heterogeneity tests show more pronounced effects for the central–eastern regions, state-owned firms, non-regulated industries, and non-heavily polluting sectors. A further analysis indicates that better ESG performance drives firms to increase their environmental investment, upgrade their value chains, and enhance new quality productive forces. This study extends the framework of ESG determinants by integrating climate adaptation policies, offering insights for urban climate governance and firms’ low-carbon transitions.

Suggested Citation

  • Mo Zhou & Kaihua Bao & Xiliang Hu & Chen Gao & Ya Wen & Ting Zhang, 2025. "Climate-Resilient City Construction and Firms’ ESG Performance: Mechanism Analysis and Empirical Tests," Sustainability, MDPI, vol. 17(14), pages 1-22, July.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:14:p:6252-:d:1697163
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