Greening Corporate Environmental, Social, and Governance Performance: The Impact of China’s Carbon Emissions Trading Pilot Policy on Listed Companies

With carbon emissions continuing to rise, global warming has become a popular research topic. To address climate change, China is taking proactive measures to reduce its carbon emissions. Covering the period between 2009 and 2021, this study utilizes data from 3668 publicly listed companies in China, along with data from their respective cities, to investigate the impact of the carbon emissions trading pilot policy on their environmental, social, and governance (ESG) performance. The conclusions show that the policy has greatly improved corporate ESG performance. However, its impact on the corporate ESG performance has varied over time, across different entities, and among different cities. Furthermore, the companies’ level of green innovation plays a crucial intermediary role. Additionally, a company’s risk-bearing capacity and level of urban green credit support positively moderate the effectiveness of the policy. These findings enrich our understanding of the relationship between the pilot policy and corporate ESG performance.