Impact of ESG Implementation on Total Factor Productivity under the Context of Carbon Peak and Neutral Target

The focus of this essay is the relationship between environmental, social, and corporate governance (ESG) performance and total factor productivity (TFP) under the Dual Carbon Target. Through the technology innovation effect and allocation effect of resources, the research examines and explores how ESG affects TFP. Between them, the technology innovation effect releases the innovation potential of enterprises from three dimensions: innovation efficiency, innovation quality, and innovation output (the increase of green invention patents), meanwhile, the resource allocation effect improves investment efficiency as well as reduces financing constraints, increasing green investment opportunities. There has been a preliminary discussion in existing literature on the impact of ESG advantages on corporate innovation output, but no literature has yet addressed how ESG expands green investment opportunities via firm innovation. Hence, the article provides a new insight into green investment opportunities to reveal the intrinsic mechanisms of the impact of ESG performance on enterprise TFP, expanding the research perspective of relevant literature. The findings in this paper demonstrate that ESG advantages can effectively enhance corporate TFP, and offer valuable implications for governments to strengthen environmental assessment mechanisms to better incentivize companies to unleash innovative potential, thereby promoting comprehensive green transformation and economic development.