How Management Incentives Influence Corporate Financial Performance: A Mediating Effect Analysis Based on ESG Performance

With the establishment of China’s “dual carbon” target and the promotion of high-quality development strategy, the role of green innovation has become increasingly important. Corporate ESG innovation, as a guiding principle for companies to practice sustainable development and an important signal for evaluating their environmental and social responsibilities as well as corporate governance level, deserves in-depth research on its impact on green innovation performance. This paper empirically analyzes the green innovation effect of corporate ESG (Environmental, Social and Governance) performance using Chinese A-share listed companies as a sample from 2009 to 2021. The research shows that corporate ESG performance can enhance green innovation performance. Mechanism analysis reveals that ESG performance mainly improves green innovation performance by alleviating financing constraints and enhancing human capital. Further research shows that all three sub-dimensions of ESG performance contribute to improving green innovation performance, with the strongest effect observed in corporate governance performance. ESG performance not only enhances strategic green innovation performance and independent green innovation performance but also improves substantial green innovation performance and collaborative green innovation performance. Therefore, the government should improve the ESG information disclosure system, increase support for companies with excellent ESG performance, and improve local talent policies to attract high-quality green innovation talents. Investors should incorporate ESG performance into their decision-making and strengthen the identification and use of ESG information. Companies should formulate ESG strategies, increase relevant investments, prioritize corporate governance improvement, and enhance the quality of ESG information disclosure through various means.

Under the leadership of the Communist Party of China (CPC), this study aims to explore the relationship between independent directors who are CPC members and firms' ESG (environmental, social, and governance) performance. We use a sample of 30,629 A-share firms in China for the period 2012–2021. Our main results show that CPC membership among independent directors can significantly improve firms' ESG performance, with board meetings serving as an important mechanism for this effect. We also examine the impact of CPC membership on external supervision, attention levels, “full and strict governance over the Party”, and ownership nature. The influence of independent directors' CPC membership on firms' ESG performance is greater in companies lacking external supervision, those with higher attention levels, and in state-owned enterprises (SOEs).

Improving manufacturing organizations' ESG (Environmental, Social, and Governance) performance is becoming more and more important in the global pursuit of green and sustainable development. AI (Artificial intelligence) has become a vital instrument for manufacturing companies to obtain a driven advantage in sustainability as a result of the growing digital revolution and urgent environmental issues. There is little academic research on the precise effects of artificial intelligence (AI) on the performance of ESG of manufacturing companies. The role of digital technologies in promoting ESG developments has been not extensively explored. The sample consists of Chinese-listed manufacturing companies from 2013–2022. This research study fills the research gap by developing a theoretical framework of how AI affects manufacturing organizations ESG pillars. Regression analysis, a correlation matrix, and descriptive statistics were used by the researcher to examine the data. The results show that the use of AI technology successfully encourages enhancements in manufacturing companies' ESG performance. This research adds to the body of knowledge on improving ESG performance, clarifies the theoretical basis for AI-enabled companies' non-economic performance, and expands the use of organizational dualism theory in novel settings.

This paper analyzes the impact of digital transformation on corporate ESG (environmental, social, and governance) performance based on the dynamic capability theory of enterprises and the stakeholder theory perspective and conducts empirical tests based on the data of Chinese A-share listed companies in Shanghai and Shenzhen from 2009 to 2022. Before, researchers mostly looked at overall ESG performance. This paper, on the other hand, starts by looking at overall ESG performance and then goes on to look at each of the three ESG dimensions (E, S, and G). It then does a subdimensional refinement to see how digital transformation affects the different dimensions of ESG performance and then checks how the company's ability to innovate in green technology affects the subdimension of ESG performance. This paper puts digital transformation and ESG performance in the same analytical framework, and from the perspective of digital transformation, it puts forward targeted insights and suggestions to improve the ESG performance of Chinese enterprises, providing theoretical support and empirical evidence to promote the practice of ESG development in Chinese enterprises.

This paper aims to examine the relationship between organisational learning and ESG (environmental, social, and governance) performance. The PRISMA protocol was followed by full-text reading 57 peer-reviewed academic journal articles published in different international journals from 2001 to 2021. After investigating and synthesising the empirical papers, the author found that organisational learning is instrumental to derive the fundamental factors and mechanisms to drive ESG performance. The findings of this research provide the first comprehensive assessment of the relationship between organisational learning and ESG, as well as highlight that organisational learning related to ESG is significantly important to ESG performance, which lies in the overlooked and hidden extant studies. The major contribution of this study is to connect organisational learning with ESG performance from a holistic perspective through different learning loops and put stress on the importance of two learning loops to better facilitate ESG strategy through ‘2P’ (people and process). Specifically, the conceptual framework of two learning loops was developed, which could lay the foundation for scholars’ future research on organisational learning related to ESG performance, such as single-loop learning about the process (i.e., control system, decision-making, ethics, gender balance, human resource management, knowledge management, risk management, and training), and double-loop learning about the roles of people (i.e., practitioners, professionals, managers, and the top management team). The ‘PPT’ (people, process, and technology) approach is also designed for future testing and validation to transform single-loop learning into double-loop learning.

This research aims to investigate the processes for using digital finance to address the sustainability triple-bottom-line challenge, as digital finance is essential for attaining sustainability. Within the context of digital finance, this article investigates the inner workings of the relationship between financial performance and ESG (environmental, social, and governance) factors. Indirectly improving both short- and long-term financial success for organizations, digital finance promotes ESG performance, according to the research. Furthermore, the key enabler for ESG and short-term financial success is the depth of digital finance adoption. According to the results of the mechanism study, improving green innovation and bolstering digital transformation would strengthen the favorable correlation between digital finance and ESG. Furthermore, according to heterogeneity study, big businesses and SOEs (state-owned enterprises) have a stronger positive effect on ESG and financial performance when it comes to digital finance use depth, but small firms and non-SOEs have a stronger positive effect on ESG when it comes to coverage breadth. By outlining potential avenues for sustainable behavior, this article deepens our understanding of digital money.

Purpose This paper aims to examine the relationship between human rights practices and firm market and financial performance and the moderating role of Environmental, Social and Governance (ESG) practices. Design/methodology/approach The authors use ordinary least squares regression as a baseline methodology on US-listed firms from 2002 to 2023 and generalized method of moments estimation to account for endogeneity concerns. Findings The results indicate that firms’ human rights practices are significantly associated with market performance and return on assets. Additionally, ESG practices significantly moderate the relationship between human rights practices and firm performance. Human rights performance has a greater impact on market performance when moderated by ESG practices. Research limitations/implications This study contributes to the academic discourse by exploring the complex relationship between human rights and ESG performance. Identifying human rights practices as a social cost has intrinsic value for firms, driving toward desirable levels of human rights practices within corporate governance systems, consistent with stakeholder and social exchange theories. Originality/value This study provides novel insights into the interactive effects of human rights and ESG factors on firms’ market and financial performance, offering a deeper understanding of how these elements collectively shape corporate outcomes.

ESG performance, institutional investors’ preference and financing constraints: Empirical evidence from China

Board governance and ESG performance in Tokyo stock exchange-listed automobile companies: An empirical analysis

This paper uses a sample of Chinese A-share listed companies from 2010 to 2022 to examine the impact of supply chain resilience and ESG (Environmental, Social, and Governance) performance on corporate growth, while exploring the pathways through which these factors operate. The study finds that strengthening supply chain resilience and enhancing ESG performance both contribute to sustainable corporate growth. The mediation analysis indicates that supply chain resilience accelerates corporate growth by optimizing the production process through improved total factor productivity, whereas ESG performance promotes corporate growth by alleviating financing constraints and broadening funding sources. Furthermore, heterogeneity analysis reveals that the impact of supply chain resilience varies among companies of different sizes and production factors. Specifically, the positive effects of supply chain resilience are more pronounced in small and technology-intensive firms. Similarly, the role of ESG performance varies depending on whether the CEO holds dual roles and at different stages of the corporate life cycle. In companies without dual CEO roles and during the growth phase of a company, ESG performance has a more significant positive impact on corporate growth.

Objective: This article discusses the assessment model used to evaluate the ESG (Environmental, Social, and Governance) performance of companies. The purpose of this article is to present a new ESG (Environmental, Social, and Governance) rating methodology developed in accordance with the recommendations of the Bank of Russia and explain its benefits for sustainable investment in the context of the Russian market. Methods: The data structure, preprocessing, and scoring methodology have been elaborated. The scoring algorithm considers the intrinsic value of each criterion and evaluates the relative performance of a company within an industry. The methodology discussed here can provide a basis for investors to select companies based on ESG performance. Results: The authors accomplished several tasks in this study, including introducing the concept of ESG and discussing its importance, describing sources of data and criteria used to evaluate sustainable development, and developing a methodology for assessing ESG scores. They also discussed the benefits of this methodology for the Russian market and created a consolidated rating of companies based on ESG factors. Conclusion: The authors have developed a comprehensive and objective assessment model for evaluating the Environmental, Social and Governance (ESG) factors of companies in Russia. The model's approach to data collection, preprocessing, and scoring provides investors with reliable and informative data for making responsible investment decisions.

Corporate ESG (Environmental, Social, and Governance) performance has attracted growing scrutiny from regulators, investors, and the public, yet how and why firms respond heterogeneously to ESG mandates remains less understood. Drawing on policy compliance and cross-border regulatory theories, we examine how firms’ internal compliance willingness interacts with cross-border regulatory spillovers to shape ESG performance. Exploiting Hong Kong’s 2019 ESG disclosure reform as a quasi-experimental case, we employ a generalized difference-in-differences analysis of Chinese listed companies (2012–2022). Our findings reveal that both internal compliance willingness and stricter extraterritorial ESG standards independently and jointly enhance corporate ESG performance. Importantly, cross-border regulatory spillovers exert a greater impact on firms already inclined towards compliance. These insights enrich regulatory compliance theory by underscoring the conditional nature of cross-border regulatory spillover effects and emphasizing the critical moderating role played by corporate behavioural factors. Our study provides important insights for regulators and firms aiming to optimize ESG compliance strategies in cross-border regulatory contexts.

The escalating global climate change has led to more severe environmental problems, which now serve as a major constraint on sustainable economic growth. This study focuses on analyzing the ESG performance and carbon information disclosure of Chinese A-share listed businesses from 2012 to 2020. It also investigates the influence of corporate ESG performance on their disclosure of carbon emission information. Studies have revealed that a company’s ESG performance has a notable and positive impact on its disclosure of carbon-related information. When companies are non-state-owned ones, in non heavily polluting industries, and located in stricter environmental regulations, companies with superior ESG (Environmental, Social, and Governance) performance are more likely to provide information about their carbon emissions. The research findings offer empirical evidence for enhancing the transparency of carbon-related data by Chinese publicly traded enterprises and attaining the objectives of “dual carbon”.

This study examines the influence of the diversity of the board of directors (BoD) and the environmental, social and governance (ESG) performance of 105 Italian banks during the period 2017–2021. Our analysis investigates board diversity in terms of board attributes (board size, board age, board gender diversity, board independence and CSR (corporate social responsibility/sustainability committee) and measures ESG dimensions by using the ESG score provided by the Refinitiv database hosted by Thomson Reuters. The main empirical results reveal that the board size, board independence and the presence of a CSR/sustainability committee positively influence a bank’s ESG performance while no significant relationship between board average age and ESG performance is found. Additionally, the relationship between gender-balanced boards and ESG performance is positive but the impact of female directors on ESG performance is non-linear when a critical mass of women is reached. This paper comprises an in-depth inspection of the corporate governance (CG) in banks, since in Italy there is limited literature concerning diversity in BoDs despite the relevance of the topic. This study is the first that examines the impact of specific CG characteristics (board diversity) on ESG performance in the Italian banking sector, to date. The investigation is highly relevant to managers and investors considering ESG issues in their decision-making process. In addition, findings have implications for both regulators and practitioners, suggesting that policymakers and managers should pay more attention to corporate governance aspects to enhance ESG performance.

PurposeThis paper aims to examine the relationship between environmental, social and governance (ESG) performance and systemic risk sensitivity of Chinese listed companies. From the consumer loyalty and investor structure perspectives, the relationship between ESG performance and systemic risk sensitivity is analyzed.Design/methodology/approachSince Morgan Stanley Capital International (MSCI) ESG officially began to analyze and track China A-shares from 2018, 275 listed companies in the SynTao Green ESG testing list for 2015–2021 are selected as the initial model. To measure the systematic risk sensitivity, this study uses the beta coefficient, from capital asset pricing model (CPAM), employing statistics and data (STATA) software.FindingsThe study reveals that high ESG rating companies have high corresponding consumer loyalty and healthy trading structure of institutional investors, thereby the systemic risk sensitivity is lower. This paper reveals that companies with high ESG rating are significantly less sensitive to systemic risk than those with low ESG rating. At the same time, ESG has a weaker impact on the systemic risk of high-cap companies than low-cap companies.Practical implicationsThe study helps the companies understand the influence of market value on the relationship between ESG performance and systemic risk sensitivity. Moreover, this paper explains explicitly why ESG performance insulates a firm’s stock from market downturns with the lens of consumer loyalty theory and investor structure theory.Originality/valueThe paper provides new insights on the company’s ESG performance that significantly affects the company’s systemic risk sensitivity.