ESG: Resource or Burden? Evidence from Chinese Listed Firms with Innovation Capability as the Mediating Mechanism

This study is based on data from 15,436 firm-year observations of Chinese A-share listed companies during the period 2009–2022 and examines the impact of ESG on firm value and the mediating role of corporate innovation capability. Firm value is proxied by Tobin’s Q, ESG is measured using Huazheng ESG scores, and innovation capability is represented by a weighted patent index. Using fixed-effects models and robustness text, we find that ESG has a significant positive impact on firm value, and this effect is transmitted through firms’ innovation capability. Further analysis reveals that the positive impact of ESG on firm value is more pronounced in non-SOE, firms in the maturity stage, and firms operating in highly competitive markets. Robustness tests confirm that the results are consistent and reliable. The findings suggest that ESG should be regarded as a strategic resource rather than a burden, as it creates firm value by enhancing innovation capability. The conclusions of this study not only extend the literature on the ESG–firm value nexus in the context of emerging markets but also provide practical implications for managers and policymakers seeking to integrate ESG into corporate strategy.