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Green finance and ESG performance of enterprises: Evidence from Green Finance Reform and Innovation Pilot Zone

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  • Yangyang Sun
  • Dongmei Wang

Abstract

Corporate ESG performance holds a critical role in driving the shift towards sustainable production. Green finance promotes the green transformation of enterprises by altering the allocation of financial resources, which plays a crucial role in enhancing corporate ESG performance. Based on data from Chinese listed companies between 2012 and 2020, this study innovatively employs the triple difference methodology to explore the impact of the Green Finance Reform and Innovation Pilot Zones (GFRI) policy on the ESG performance of heavily polluting enterprises. Our findings reveal a significant improvement in ESG performance, especially in environmental protection and social responsibility scores. Mechanism tests reveal that GFRI policy enhances ESG performance by promoting green innovation, increasing investment in environmental protection, and reducing agency costs. For state-owned enterprises and enterprises whose CEO has environmental protection experience, GFRI policy has a greater promotion effect on ESG performance. Furthermore, GFRI policy has stronger effects in regions with stringent environmental regulations and on companies in growth and maturity stages. We further provide new theoretical explanations and empirical evidence for the green transformation of economic development in developing countries.

Suggested Citation

  • Yangyang Sun & Dongmei Wang, 2025. "Green finance and ESG performance of enterprises: Evidence from Green Finance Reform and Innovation Pilot Zone," Applied Economics, Taylor & Francis Journals, vol. 57(60), pages 11204-11218, December.
    • Handle: RePEc:taf:applec:v:57:y:2025:i:60:p:11204-11218
    DOI: 10.1080/00036846.2025.2450383
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    Cited by:

    1. Zhongyi, Fang & Jing, Tong, 2026. "lmpacts of green finance cognition on entrepreneurial performance," Finance Research Letters, Elsevier, vol. 89(C).
    2. Zhang, WeiDa & Huang, YuMeng & Li, QingXin, 2026. "How do green finance reform pilot zones affect public welfare?," Finance Research Letters, Elsevier, vol. 89(C).

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