How ESG contributes to corporate financial performance: an integrative framework from the dual perspectives of capital and product markets

This study examines the impact of ESG on corporate financial performance, emphasizing the mediating roles of debt financing cost and product competitive advantage. Drawing on a two-way fixed effects model and a panel dataset of Chinese A-share listed firms from 2013 to 2022, the findings indicate that ESG significantly enhances corporate financial performance. Furthermore, ESG promotes financial performance through two complementary mechanisms: lowering debt financing costs and strengthening product competitive advantage. This study suggests that firms should prioritize ESG integration and marketing to boost financial outcomes, while the government should refine green finance policies and regulations to support sustainable development.