Does Climate Governance Affect <scp>ESG</scp> Performance in Traditional Energy Firms? Policy Evaluation and Mechanism Analysis

ABSTRACT Against the backdrop of intensifying global climate change and frequent extreme weather events, developing climate‐resilient cities has emerged as a key driver for green transformation in traditional energy enterprises. This study uses a difference‐in‐differences approach; we investigate how climate governance initiatives affect these firms' ESG performance and the underlying mechanisms. Our analysis yields the conclusion that the climate‐resilient city pilot policy has a significant positive effect on the ESG performance of traditional energy firms. Mechanism analysis reveals three pathways: environmental regulation effects, social monitoring effects, and government incentive effects. Heterogeneity analysis shows stronger effects for firms with higher managerial ownership, smaller‐scale enterprises, state‐owned enterprises, competitive industries, high‐emission regions, and large cities. Extended analysis indicates financing constraints weaken these positive effects, particularly for heavily polluting enterprises. This study provides robust evidence for policy evaluation and contributes theoretical and empirical insights for enhancing ESG performance in traditional energy sectors.