Does ESG performance enhance firm performance? the mediating role of green innovation

This study investigates the relationship between ESG performance and firm performance among Chinese A-share listed companies during 2014–2024. As ESG practices become integral to corporate governance and quality-oriented management, they increasingly shape organizational resilience and sustainable competitiveness. The findings reveal that stronger ESG performance is associated with improved firm performance and greater green innovation, with green innovation acting as an important pathway linking ESG initiatives to superior organizational outcomes. These results highlight the value of policy environments that encourage ESG adoption while enabling firms to tailor sustainability strategies to their organizational capabilities. Sustained investment in green innovation, capability development, and continuous improvement enhances organizational adaptability, strengthens operational effectiveness, and supports long-term value creation, providing practical guidance for firms pursuing sustainable competitive advantage in an evolving business landscape.