Sailing on trust: The impact of social credit system construction on corporate ESG performance

China’s construction of the social credit system (CSCS) is a significant measure for improving the basic market economy system and promoting sustainable economic development. With data from Chinese A-share listed enterprises spanning 2006–2024, this study considers the creation of CSCS demonstration pilot cities as a quasi-natural experiment, and analyzes its effects on corporate environmental, social, and governance (ESG) performance employing the difference-in-differences approach. The findings demonstrate that the CSCS has a significant promotional effect on ESG performance, and this conclusion remains valid following a number of robustness tests. Mechanism analysis reveals that the CSCS promotes enterprises’ ESG performance by alleviating financing constraints, reducing agency costs, and increasing public attention. Heterogeneity analysis shows that the CSCS improves the ESG performance of state-owned enterprises, firms with myopic managers, and those operating in less competitive industries more significantly. Additional investigation reveals that enterprises with lower ESG performance benefit more from the CSCS’s favorable effects on corporate ESG performance. Green finance reforms, financial supervision, information disclosure mechanisms, and digital economic development positively moderate the relationship between CSCS and corporate ESG performance. Additionally, corporate “greenwashing” tactics can be curbed by the CSCS. The above conclusions not only enrich the relevant research on corporate ESG performance, but also provide policy insights for the government to promote the CSCS, which has important practical significance for promoting a country’s sustainable development.