Does the ESG Performance of Chinese Heavy Polluters have an Impact on Credit Decisions?

Taking Chinese A-share heavy polluters as a research sample from 2009 to 2021, this paper investigates the impact of ESG performance on bank credit.It is found that high-quality ESG performance can significantly increase loan size and reduce firms' loan costs, and the Green Credit Guidelines issued in 2012 strengthen the impact of firms' ESG performance on bank credit.Meanwhile, mechanistic analyses show that good ESG performance influences bank credit decisions by reducing banks' expectations of corporate business risks.To advance the adoption of ESG principles by enterprises and banks, this study offers some recommendations for government, banks, and enterprises.These measures collectively promote a collaborative approach to embedding ESG principles in financial and corporate practices, driving progress toward sustainable development.