The Impact of ESG Scores and Their Interaction with Industry Characteristics on Corporate Bond Financing Costs: An Analysis from the Perspective of Credit Spreads

In today’s world, sustainable development is gaining increasing prominence, and the emergence of ESG score is driving the evolution of sustainability. From the perspective of credit spreads, the channels through which ESG score influence bond credit spreads represent an area warranting further research. This study offers investors a fresh perspective on acknowledging the importance of non-financial metrics such as ESG score, while also advocating for Chinese policy to differentiate between enterprises based on their sector-specific characteristics. This study examines the impact pathways from a theoretical standpoint, then employs a fixed-effects model to conduct empirical analysis using corporate bond characteristics issued on the Shenzhen and Shanghai stock exchanges between 2017 and 2023. Heterogeneity analysis is further applied to distinguish between heavily polluting and non-heavily polluting enterprises. Findings confirm that ESG score reduce corporate bond financing costs, with significant differences in main effects between heavily polluting and non-polluting enterprises. Recommendations include: heavily polluting enterprises should prioritise improving their ESG metrics, while policymakers should implement differentiated policies for distinct enterprise types to enhance environmental awareness and advance dual carbon objectives.