Demand Meets Supply: The <scp>ESG</scp> Impact of Green Procurement and Green Subsidy

ABSTRACT Drawing on China's policy practices under the “dual carbon” goal, this study examines how green procurement (GP), a demand‐side policy, and green subsidies (GS), a supply‐side policy, jointly affect corporate ESG performance. Using panel data of A‐share listed industrial firms from 2015 to 2022 and a two‐way fixed effects model, the findings show: (1) the GP–GS policy mix significantly enhances ESG performance through complementary “market‐locking” and “resource‐matching” effects; (2) mechanism analysis identifies three channels—greater information transparency, stronger market competition, and higher green innovation; and (3) heterogeneity tests reveal stronger impacts among heavily polluting firms and in regions with robust institutional environments. By moving beyond single‐policy analyses, this study provides evidence on the synergistic optimization of demand‐ and supply‐side environmental policies and offers micro‐level insights to refine China's green governance toolkit and strengthen ESG drivers.