Can the Inclusiveness of Foreign Capital Improve Corporate Environmental, Social, and Governance (ESG) Performance? Evidence from China

Foreign direct investment (FDI) has become an important factor influencing corporate operational strategies, yet the impact of its inclusiveness on corporate environmental, social, and governance (ESG) performance remains unclear. In this study, the correlation of city-level FDI inclusiveness with corporate-level ESG performance was investigated based on data from 1258 Chinese A-share listed companies between 2011 and 2021. The effects of FDI inclusiveness on corporate ESG performance and its underlying mechanisms were investigated. The findings indicate that an increase in FDI inclusiveness significantly improves corporate ESG performance. Additionally, the moderating role of corporate competitive advantage and urban entrepreneurial vitality was analyzed, and the findings indicate that an increase in urban FDI inclusiveness significantly improves corporate ESG performance. Managerial green attention and corporate innovation capability play intermediary roles in the overall impact, with the total impact being positively moderated by investor attention. Furthermore, the influence of FDI inclusiveness on corporate ESG performance exhibits significant heterogeneity resulting from variations in digital policies, environmental policies, and ownership structures.