Government Environmental Regulation and Corporate ESG Performance: Evidence from Natural Resource Accountability Audits in China

Abstract

With the increasing global concern for the ecological environment and sustainable development, all countries have proposed environmental regulatory policies to improve the quality of their ecological environments. China has also proposed an environmental regulation policy: Leading an officials’ accountability audit of natural resources (AANR). As the main subject of consuming resources, the sustainability of enterprises has become a focus of all parties. The Environmental, Social, and Governance (ESG) metric measures corporate sustainability. As a result, companies’ ESG performance has gained the community’s attention. Based on data from Chinese A-share listed companies in Shanghai and Shenzhen from 2011 to 2019, this study investigates the role of AANR on the ESG performance of companies via the difference-in-differences (DID) method. This study found that implementing the AANR pilot significantly negatively impacted corporate ESG performance. This result was found to remain robust after passing parallel trend and robustness tests. Further research found that the AANR differed significantly across corporate ownership and regions in corporate ESG performance. First, pilot implementation had a more significant impact on the ESG performance of non-state enterprises. Second, the differences across regions showed that the central region had the most significant impact, followed by the western region, while the eastern region had the most negligible impact. This study will help government departments improve the AANR system and enable companies to focus on their ESG performance.

The power of CEO growing up in poverty: Enabling better corporate environmental, social, and governance (ESG) performance

“…While Bloomberg provides data for Chinese listed companies from 2006 onwards, there are significant gaps in the available scores during the period from 2006 to 2010 (Ge et al, 2022). Additionally, the global financial crisis that occurred from 2007 to 2009 further complicates the data availability (Yan et al, 2022). Consequently, we have chosen to commence our sample from 2011 as the starting year, and conducted an analysis using data from all Chinese firms that were listed on either the Shanghai or Shenzhen Stock Exchanges between 2011 and 2020.…”

Public Participation and the Effect of Environmental Governance in China: A Systematic Review and Meta-Analysis

“…(4) The studies without panel data test are worth 0.5 points, and those with a panel data test are worth 2 points. (5) If the panel data of the study did not contain the statistical data of the last ten years, this was calculated as 0.5 points; if the panel data included the statistical data of the last ten years, this was calculated as 2 points. The total score of each study was between 0 and 10, where the higher the score, the better the quality of the study.…”

“…China, as a country with serious environmental problems, is no exception. Since the 21st century, environmental problems caused by rapid economic development have rapidly emerged [5]. China has begun to rethink its environmental governance systems due to the shortcomings of the government and enterprises, with public participation as key to solving environmental problems and sustainable development [6].…”

Analysis of the Impact of ESG Performance on Financial Market Stability from the Perspective of Multivariate Statistical Models

“…More businesses have recently shown a stronger dedication to ESG initiatives in an effort to be acknowledged as socially conscious. The importance of the ESG concept to the capital market has increased in parallel with the development of the Chinese capital market's regulatory framework and general maturity, emerging as a significant source of corporate signals [11]. There are a number of comparative benefits to taking non-financial aspects into account during the investing process, including increased profitability and better risk management [12].…”