Environmental Social and GovernancePerformance, Total Factor Productivityand Environmental Uncertainty in HeavilyPolluting Companies

In recent years, countries around the world have introduced policies to promote the widespread adoption of Environmental, Social, and Governance (ESG) principles.However, as key players in the green transition, heavily polluting companies face significant challenges in effectively balancing economic growth with environmental protection while implementing ESG strategies.The current highly unstable external environment exacerbates the difficulties these companies encounter in executing their ESG initiatives.Additionally, there is a lack of literature exploring the impact of ESG performance on total factor productivity for heavily polluting companies under environmental uncertainty.This study aims to fill this gap by analyzing data from heavily polluting companies listed on China's A-share market from 2011 to 2022.Using a panel data regression approach, the study examines the impact of ESG performance on total factor productivity and explores the moderating role of environmental uncertainty.The findings reveal that ESG performance positively influences total factor productivity, with stronger effects observed in non-state-owned companies, companies located in pillar industries, or companies with low-competition markets.Mechanism tests suggest that ESG enhances total factor productivity by reducing financing constraints, improving human capital, and fostering innovation.Moreover, environmental uncertainty can amplify the positive effect of ESG performance on total factor productivity by moderating the roles of financing constraints, human capital, and technological innovation.Therefore, strengthening ESG practices can serve as a strategic approach to mitigating risks, fostering sustainable growth, and improving financial stability in heavily polluting companies.This study contributes to the broader literature on ESG and corporate productivity by highlighting the critical role of environmental uncertainty in shaping ESG's effectiveness and provides valuable insights for policymakers and corporate managers seeking to enhance corporate productivity while navigating environmental uncertainty.