Panel study reveals that government procurement improves corporate green governance performance in publicly traded firms, indicating its value as an effective demand-side policy tool.
Promoting corporate green governance is essential for sustainable development. Using a panel of Chinese A-share listed firms from 2015 to 2023, this paper examines how government procurement influences corporate green governance performance. The results reveal that receiving government procurement significantly enhances a firm’s green governance performance. Mechanism analyses demonstrate that this effect operates through two channels: stimulating corporate environmental protection investment and promoting green innovation. Heterogeneity analyses further show that the positive effect is more pronounced among firms with stronger environmental awareness, larger size and mature lifecycle stages, as well as those in high polluting industries. These findings highlight the role of government procurement as an effective demand-side instrument in driving corporate green governance.
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Wan et al. (2026) studied this question.
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