How Does Fintech Drive Corporate ESG Performance? Evidence from China

With climate risk and sustainable development dominating global policy agendas, a key question for regulators and researchers alike is whether and under what conditions fintech development is associated with improved corporate ESG performance. Using A-share listed firms in China from 2011 to 2024, this paper builds a city-level fintech index from Baidu News advanced search records and links it to firm-level ESG and financial data. Our baseline estimates confirm that fintech development significantly improves corporate ESG performance. This core finding remains robust across lagged regressors, an ordered logit specification, additional industry fixed effects, the exclusion of the 2020 to 2022 pandemic window, and a spherical-distance-to-Hangzhou instrumental variable. Mechanism tests reveal two complementary channels: fintech eases financing frictions and stimulates green innovation. Further analyses are conducted to explore boundary conditions. Both management shareholding and spatial competition exert direct positive effects on ESG performance, yet their interactions with fintech are significantly negative, pointing to a substitution rather than complementary relationship. Heterogeneity analysis shows that the effect is more pronounced among state-owned enterprises, large firms, non-high-tech and labor-intensive industries, growth-stage firms, and firms in the eastern region. Our results offer differentiated policy implications for strengthening digital infrastructure, refining financing arrangements for growth-stage and SMEs, and calibrating region- and life-cycle-sensitive regulatory frameworks.