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Can companies get more government subsidies through improving their ESG performance? Empirical evidence from China

Author

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  • Xuan Zhang
  • Jingxian Zhang
  • Yongjie Feng

Abstract

Environmental protection and social obligation fulfillment have become hot subjects as the "dual carbon" approach has been developed and deepened. The ESG system is consistent with China’s current policies, abandoning the traditional business philosophy of economic supremacy in favor of comprehensively measuring corporate social responsibility and sustainable development capability across three dimensions: environmental (E), social (S), and corporate governance (G), which receive widespread attention from all sectors of society. Based on observational data from A-share listed businesses in Shanghai and Shenzhen from 2011 to 2020, this study empirically evaluates the influence and mechanism of ESG on government subsidies. The research results indicate that enterprises can receive more government subsidies by improving ESG performance. Mechanism analysis found that corporate transparency plays a positive mediating role in the process of ESG affecting government subsidies. Further research on political affiliation and property rights has found that companies without political affiliation are more inclined to receive more government subsidies by improving ESG performance, and the impact of political affiliation and ESG performance on government subsidies is mutually complementary. Enterprises with different property rights have different strengths of motivation to increase government subsidies by improving ESG performance. State owned enterprises (excluding central enterprises) are the strongest, followed by non-state-owned enterprises, and central enterprises are the weakest. Therefore, enterprises should be further encouraged to strengthen ESG construction, improve the quality of ESG information disclosure, improve resource allocation efficiency, and promote high-quality development of enterprises.

Suggested Citation

  • Xuan Zhang & Jingxian Zhang & Yongjie Feng, 2023. "Can companies get more government subsidies through improving their ESG performance? Empirical evidence from China," PLOS ONE, Public Library of Science, vol. 18(10), pages 1-25, October.
    • Handle: RePEc:plo:pone00:0292355
    DOI: 10.1371/journal.pone.0292355
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    References listed on IDEAS

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    Cited by:

    1. Caiyun Lin & Meijun Qian & Xuyang Su & Chuanhao Wen, 2025. "Can Carbon Finance Correct Strategic ESG Behavior of Enterprises? Evidence from China," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(4), pages 14180-14214, October.
    2. Gong, Qi & Kong, Zhaoyang & Li, Liang & Dong, Xiucheng & Li, Yang, 2026. "The consequences of hypocrisy: how ESG greenwashing undermines green total factor productivity," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 106(C).
    3. Yang Zhang, 2025. "Does ESG Performance Affect Enterprise Innovation Performance? A Study on Governance and Resource Effects," SAGE Open, , vol. 15(3), pages 21582440251, July.
    4. Mandella Osei‐Assibey Bonsu & Samuel Clottey Attuquaye & Katie Hyslop & Ying Wang & Li Kaodui, 2026. "Do Corporate Strategies in Fintech and Green Finance Enhance ESG Performance? The Moderating Role of Government Policies," Business Strategy and the Environment, Wiley Blackwell, vol. 35(5), pages 6960-6981, July.
    5. Jiaxin Zhuang & Yinglin Wang & Shengxu Shi, 2025. "ESG Enterprise Hybrid Risk Diversification Mechanism Based on Third‐Party Guarantee," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(7), pages 4032-4055, October.
    6. Li, Ruiqian & Che, Chang & Huang, Tong, 2026. "Financial distress and corporate ESG greenwashing," International Review of Economics & Finance, Elsevier, vol. 106(C).
    7. Wang, Zhongli & Nishihara, Michi, 2025. "Investment and information asymmetry in corporate sustainability: Incentive-auditing contracts and policy insights," International Review of Financial Analysis, Elsevier, vol. 105(C).
    8. Li, Dan & Ma, Ming, 2026. "Does bankruptcy threat crowd out corporate ESG? Evidence from China’s bankruptcy court reform," Finance Research Letters, Elsevier, vol. 89(C).
    9. Chai, Jingmin & Meng, Tiantian, 2026. "The impact of ESG practices on value chain upgrading across lifecycle stages: Evidence from China's capital market," International Review of Economics & Finance, Elsevier, vol. 105(C).

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