Impact of Enterprise ESG Performance on Innovation Capacity: Based on the Mediating Effect of Financing Constraints

This study analyzes the relationship between corporate ESG performance and innovation capability among China's A-share listed companies (2016-2022), investigating two core questions: (1) Whether ESG performance enhances corporate innovation, and (2) how financing constraints mediate this link. Using 24,707 firm-year observations, the article employs fixed-effects models and a multidimensional innovation index covering R&D inputs, technological outputs, and ecosystem factors. The findings demonstrate that superior ESG performance significantly strengthens innovation, with environmental efforts driving green technology adoption, social dimensions fostering creative solutions, and governance improvements attracting sustainable investment. Importantly, the article identifies financing constraint alleviation as the key mechanism-ESG excellence reduces capital costs, particularly benefiting non-state-owned enterprises-thus expanding ESG theory by revealing the financial transmission channel. Robustness tests with lagged variables validate these results. These insights offer practical value: firms should enhance ESG transparency to unlock innovation potential, while policymakers should strengthen ESG-finance linkages. For emerging markets seeking sustainable development, our study provides empirical evidence on balancing environmental objectives with technological advancement through ESG integration.