We construct a heterogeneous firm trade model with the consideration of firms' ESG ratings. Based on the highly disaggregated data at the firm-destination-country-product level of China's A-share-listed firms in the period of 2009—2015, we then empirically test the impact of firms' ESG ratings on their product export behaviors and the intrinsic mechanisms. Finally, this paper conducts quantitative analyses for structural estimation. First, a firm's ESG rating has a positive effect both on its product export value and export product scope. This core finding is still valid after robustness tests such as replacing the measures of the core explanatory variable, considering sample selection issues, and mitigating endogeneity issues. Second, the foreign demand expansion effect and the export-quality enhancement effect are two important channels through which ESG rating improvement promotes the export of firms' products. Third, our heterogeneity analyses show that for firms exporting to destination countries with higher levels of sustainable development, for non-state-owned firms, as well as for firms exporting non-green and low-carbon products, the contribution of higher ESG ratings to their product exports is more pronounced. Fourth, further expansive analyses show that the positive effect of higher ESG ratings on the export value of firms' products is mainly reflected in an increase in export quantity rather than an increase in export price. Besides, the export-boosting effect of rating advantages is more significant in the “social” dimension, where the public effect is stronger. Finally, our structural estimation and counterfactual analyses reveal that an one-unit increase in a firm's ESG rating will increase its product export quantity, export value, and export product scope by 16.70%, 16.68%, and 18.02%, respectively. This paper systematically reveals, from the level of product markets, how firms can promote high-quality exports with ESG as a key, thus providing new insights for China to cultivate new-quality productive forces and expand high-level opening-up to the outside world.
Ouyang et al. (Sun,) studied this question.