The impact of green finance on ESG: Evidence from the Chinese enterprises

Research background: Existing works highlight the multifaceted nature of ESG and the wide range of factors that can influence and predict ESG standing. However, there is currently a lack of research on the impact of green finance pilots on corporate ESG. How to improve the ESG level of enterprises through green finance policies is an urgent topic to be studied. Purpose of the article: Using samples of 1300 listed companies, this study constructs a multi-period difference-in-differences model to examine the impact and mechanisms of the green finance reform and innovation pilot zone (GFPZ) pilot policies on corporate ESG levels. Methods: Multi-period difference-in-differences (DID) estimation. Findings & value added: (1) GFPZ is positively associated with the ESG of listed companies, indicating that the pilot policies effectively facilitate the improvement of ESG. This conclusion withstands robustness tests. (2) The pilot policies of GFPZ enhance ESG by promoting green technological innovation and strengthening the stock liquidity of enterprises. (3) From a theoretical perspective, this paper contributes to the literature on green finance and corporate governance by establishing a clear causal link between place-based green finance policies and firm-level environmental, social, and governance factors. This expands the understanding of policy-driven ESG in developing economies. Technically, the paper demonstrates how financial infrastructure reforms can lead to measurable sustainability outcomes through innovation and market responses. Furthermore, the paper provides targeted, actionable recommendations for optimizing GFPZ design, offering valuable insights for policymakers and ESG-oriented investors alike. The study deepens the understanding of the role of green finance in sustainable development and presents a replicable policy model for other economies seeking to improve their corporate ESG levels.