This study aims to investigate the existence of environmental, social, and governance (ESG) decoupling peer effects in the manufacturing industry and its underlying mechanisms. Using the sample of 7,983 firm-year observations of Chinese A-share listed manufacturing companies from 2010 to 2024, we find that there are significant peer effects of manufacturing firms’ ESG decoupling behaviors at both the industry and regional levels. The learning mechanism analysis indicates that non-leading economic performance enterprises are more susceptible to the ESG decoupling behaviors of their industry counterparts, demonstrating notable learning and imitation tendencies. Additionally, non-leading ESG performance firms exhibit significant learning behaviors in both industry and regional peer effects. Competitive mechanism analysis indicates that firms' ESG decoupling industry peer effects are significant in the high market competition group. Furthermore, we examine the moderating role of formal and informal institutional environments in ESG decoupling peer effects. A high-quality business environment and intense media attention can effectively weaken the spread of ESG decoupling behaviors across industries and regions. This highlights the critical role the institutional environment plays in guiding firms toward a more sustainable development trajectory.
Zhan et al. (Mon,) studied this question.