Ecological Civilization and Corporate Sustainability-Evidence from the Natural Experiment of Environmental Regulation “the Opinion”

Taking advantage of the promulgation of environmental regulation “the Opinion on accelerating the construction of ecological civilization” (referred as the Opinion) in China in 2015, this paper conducts a difference-in-differences method to investigate the effectiveness of the environmental regulation on firm’s sustainable growth by comparing Chinese pollution-intensive companies and other non-pollution-intensive ones. Our results show that the promulgation of the Opinion decreases the deviation degree of pollution-intensive companies’ actual growth rate from its sustainable growth rate, compared to the control group. In another words, the Opinion promotes the firm behavior shift towards sustainable development, especially for pollution-intensive companies. In addition, after considering the regional differences in China, the positive effects of the Opinion on sustainable growth of pollution-intensive companies are only effective in regions with higher degree of ecological civilization and ones with relatively low GDP growth pressure.