ESG Ratings and Corporate Total Factor Productivity: A Perspective on Technological Innovation and Efficiency Improvement

In recent years, with the increasing public attention to environmental and sustainable development issues, green development has become a key driver of high-quality economic growth. Based on data from Chinas Shanghai and Shenzhen A-share listed companies from 2011 to 2019, this study employs a two-way fixed effects model to empirically investigate the impact of Environmental, Social, and Governance (ESG) ratings on firms' total factor productivity (TFP) . The results show that ESG ratings significantly promote TFP, and the conclusion holds after multiple robustness tests. Mechanism analysis reveals that ESG ratings promote TFP through firms' technological innovation and improve efficiency. Further analysis shows that two control zones and perception of economic policy uncertainty have significant positive impacts on ESG ratings. However, the presence of dual-role positions in corporate governance structures inhibits the effect of ESG ratings. This study provides policy recommendations for the environmental external supervision system to promote high-quality corporate development.