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Industrial policy is a powerful tool for shaping corporate practices, yet its influence on firms environmental, social, and governance (ESG) performance has received limited attention. Existing studies largely focus on technological upgrading, overlooking the broader ESG implications of policy interventions. This study examines the impact of the made in China industry policy 2025 (MICP 2025) on corporate ESG performance using a dataset of Chinese A-share listed firms spanning 2008 to 2022. Employing a difference-in-differences framework, the analysis reveals that MICP 2025 significantly enhances ESG performance. Further, firm lifecycle analysis shows that the policy effects are most pronounced during the growth, maturity, and decline stages. Mechanism analysis confirms financing constraints as a key channel, while heterogeneity tests indicate stronger effects in high-tech regions, areas with concentrated banking systems, and regions with stricter legal enforcement. By identifying industrial policy as a key driver of ESG performance, this study contributes theoretically by linking institutional policy frameworks with corporate ESG outcomes. The findings provide actionable insights for designing industrial policies that not only foster economic and technological development but also promote responsible environmental, social, and governance practices among firms.
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Hussain et al. (2025) studied this question.
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