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Can Climate Adaptation Cities Curb Corporate ESG Decoupling?

Author

Listed:
  • Jiapeng Li

    (Economics and Management College, China University of Geosciences, Wuhan 430078, China)

  • Min Jiang

    (School of Public Finance and Taxation, Zhongnan University of Economics & Law, Wuhan 430073, China)

  • Shuwang Yang

    (Economics and Management College, China University of Geosciences, Wuhan 430078, China)

Abstract

As climate governance policies are steadily rolled out and scrutiny over corporate social responsibility intensifies, corporate ESG decoupling undermines the efficacy of climate governance and resource allocation. Using data on Chinese listed firms from 2012 to 2022, this study exploits the China Pilot Climate Adaptation City (CPCAC) program in 2017 as a quasi-natural experiment and employs a difference-in-differences (DID) approach to identify the impact of the CPCAC on corporate ESG decoupling. The results show that the CPCAC significantly reduces firms’ ESG decoupling, with the mitigating effect being particularly pronounced in the environmental responsibility dimension. Moreover, CPCAC alleviates corporate ESG decoupling by reducing corporate agency costs. Heterogeneity results show exerting a stronger influence on firms in regions with strong Confucian culture, firms with higher managerial myopia, non-politically connected firms and highly digitalized firms. The findings enrich the literature on corporate ESG behavior and its interaction with the institutional environment, and offer valuable insights for advancing climate adaptation governance and improving ESG regulatory frameworks.

Suggested Citation

  • Jiapeng Li & Min Jiang & Shuwang Yang, 2026. "Can Climate Adaptation Cities Curb Corporate ESG Decoupling?," Sustainability, MDPI, vol. 18(8), pages 1-20, April.
    • Handle: RePEc:gam:jsusta:v:18:y:2026:i:8:p:3814-:d:1918498
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