How green governance empowers high-quality development: An EKC framework-based analysis of ESG and green total factor productivity.

Abstract

High-quality development represents a fundamental shift in China's economy from scale and speed to quality and efficiency. In this transition, environmental, social, and governance (ESG) practices are not only closely integrated with China's development strategy but have also become a core standard for measuring development quality. Nevertheless, research on how ESG practices specifically promote high-quality development in Chinese enterprises remains limited. Based on the environmental Kuznets curve (EKC) theory framework, this study uses data from the Huazheng ESG Index from 2009 to 2022 and employs fixed effect models, mediation effect models, and heterogeneity analysis to examine the specific impact of China's ESG practices on corporate high-quality development from multiple dimensions. The results show that there is a "U-shaped" relationship between the ESG practices of Chinese listed companies and green total factor productivity (GTFP). Initially, improving ESG practices may temporarily suppress GTFP, but as ESG levels further improve, they exhibit a significant positive impact on GTFP. Corporations significantly boost productivity by alleviating financing constraints and promoting green technological innovation, although the direct impact on technological advancement remains relatively limited. In China's western regions and industries such as manufacturing, electricity, heat, gas, and water production and supply, wholesale and retail, and information transmission, software, and information technology services, the positive effects of ESG on GTFP are particularly evident. Based on these findings, it is recommended that governments and financial institutions collaborate to promote green credit policies and increase support for the research and development of green technologies. Additionally, environmental education and resource use optimization should be strengthened, especially in industries such as agriculture, forestry, animal husbandry, and fisheries, and the exchange of ESG technologies and experiences between industries should be encouraged.