The Impact of ESG Performance on Sustained Green Innovation of Enterprises

Amid the ongoing global green transformation and the deepening implementation of the “dual carbon” goals, the sustained enhancement of firms’ green innovation capabilities is crucial for driving high-quality development. This study utilizes panel data from A-share listed companies spanning the period from 2013 to 2023, and conducts an empirical analysis to examine how ESG performance influences firms’ sustained green innovation and its underlying effects and mechanisms. The results reveal that ESG performance exert a statistically significant positive effect on firms’ sustained green innovation. This finding remains robust across a range of robustness checks, including Heckman’s two-step method, propensity score matching (PSM), alternative ESG measures, models incorporating lagged variables, and other checks. The mechanism analysis reveals that ESG performance improves firms’ capacity to maintain green innovation and continuously accumulate its outcomes by alleviating financing constraints and reducing operational risks. Government subsidies and digitalization positively moderate the effect of ESG performance on firms’ sustained green innovation. Furthermore, the heterogeneity analysis demonstrates that the promoting effect of ESG performance on sustained green innovation is more pronounced among non-heavy-polluting firms, large-scale firms, and state-owned firms. The findings of this study provide a theoretical foundation for firms to effectively integrate ESG resources and further enhance sustained green innovation, and they also offer valuable insights into how firms can build a sustainable innovation ecosystem.