Environmental protection tax, corporate ESG performance, and green technological innovation

Abstract

Environmental, social, and corporate governance (ESG) performance is an analytical framework for measuring the contribution of enterprises to sustainable development and fulfillment of social responsibility. The introduction of an environmental protection tax in China in 2018, which imposes tax on the pollution emission of enterprises, helps enterprises improve their ESG performance and raise their environmental awareness, thus effectively promoting their green technological innovation to achieve sustainable development. This study examines the effect of China’s environmental protection tax on corporate ESG performance and green technology innovation. The findings showed that the environmental protection tax in China can vastly improve the ESG performance and green technological innovation, with the ESG performance exhibiting a partial mediating effect in promoting corporate green technological innovation. The mediating effect in enhancing ESG performance and green technological innovation varies with the nature of firms’ property rights and regions.

Resource Bundling: How Does Enterprise Digital Transformation Affect Enterprise ESG Development?

“…El Sawy et al (2009) believe that enterprise internetization is an innovation in organizational management [39] that helps strengthen the ability to obtain the resources needed for operations, production, innovation, and other activities, along with the ability to save related expenses. For example, the research and development department focuses on the feasibility of green technology, the process department focuses on the green product manufacturing capacity, and the financial department focuses on the cost and return of green innovation [40]. The integration and exchange of key information from different departments through information technology will help reduce the ambiguity and uncertainty of innovation decision-making [41].…”

How does digital finance affect firm environmental, social and governance (ESG) performance? — Evidence from Chinese listed firms

“…Ren et al (2023) argues that digital finance influences firm ESG performance through green innovation and external regulation [ 9 ]. The roles of financing constraints, green innovation and external supervision in ESG performance research have been well documented by previous scholars [ [8] , [9] , [10] , [11] , [12] ]. Based on the existing studies, this study further innovatively proposes three possible mechanisms by which digital finance affects ESG performance based on the three dimensions of ESG: the environmental dimension (green innovation), the social dimension (firm goodwill), and the governance dimension (agency costs).…”

Can companies get more government subsidies through improving their ESG performance? Empirical evidence from China

“…At the same time, enterprises with high ESG ratings pay attention to environmental risk management, and the management has a strong awareness of environmental protection. In terms of corporate decision-making, shareholders and management will make decisions and deployments based on long-term strategic goals, which is conducive to mitigating principal-agent risk and reducing agency costs [ 33 ]. The reduction of proxy costs greatly reduces corporate costs and expenses, which is conducive to promoting the effective allocation of resources, improving corporate transparency and the quality of external information disclosure [ 9 ], further attracting the attention of the government, and enhancing the possibility of obtaining government subsidies.…”