Management ability and new quality productivity transition: a DID analysis of ESG performance and financial leverage thresholds in China’s high-pollution industries

Purpose Integrating environmental competencies into leadership development, aligning managerial incentives with ESG metrics, particularly environmental targets and scaling transition finance for pollution-abatement technologies. These insights operationalize strategies to harmonize productivity growth with China's dual carbon goals, providing a replicable model for sustainable industrialization in emerging economies. Design/methodology/approach This study focuses on Chinese A-share firms from 2015 to 2022. It analyzes how environmental regulations leverage management ability (MA) to drive sustainable productivity through a multi-method framework, which combines DID, DEA-Tobit and entropy-weighted approaches. Findings Results show that stringent regulations enhance managerial competencies in pollution control and green innovation, which critically improve ESG performance – particularly environmental governance – mediating sustainable productivity gains. Moderate financial leverage optimally balances ecological investments and fiscal stability, while state-owned enterprises outperform in translating MA improvements into environmental outcomes through institutionalized low-carbon R&D coordination. Methodologically, staggered DID tests and placebo analyses address endogeneity, advancing dynamic capability theory by formalizing ESG-driven governance as a mechanism for sustainable industrialization. Research limitations/implications It has not fully covered the heterogeneity of technological diffusion within the industry. In the future, a cross-industry ecological efficiency tracking system can be constructed by integrating digital twin technology. Practical implications (1) Corporate governance: Implement substantive linkages between environmental leadership metrics and executive compensation, prioritizing core competencies in carbon asset management and circular technology commercialization. (2) Policy design: Develop leverage-differentiated green financial instruments and establish carbon market maturity-graded environmental credit systems.(3)Education reform: Integrate climate scenario simulations and ESG decision-making modules into management curricula to cultivate strategic thinking that balances short-term financial objectives with long-term ecological value creation. Originality/value By integrating dynamic capability theory with environmental economics, this study constructs an analytical paradigm for ESG transmission mechanisms. It extends the resource-based view's explanatory scope regarding green intangible assets and reveals institutional complementarities in low-carbon technology sharing and ecological resource integration through the “policy anchoring–market response” model.