Green R & D investment, ESG reporting, and corporate green innovation performance

Abstract

Given the contradictory empirical evidence on the relationship between green R&D expenditure and corporate Green Innovation performance (GIP), The present research study is a distinctive investigation into the moderating impacts of ESG reporting on this relationship. We utilized a data collection of 3,846, firm-year observations of A-share listed firms in China from 2016 to 2022 from CSMAR and Bloomberg databases. The firm’s Corporate GIP is assessed and measured by looking at the total quantity of green patents. Lastly, models with multiple regression analyses and fixed effects were employed. The findings show that ESG reporting has a positive and significant impact on the association between corporate GIP and green R&D expenditure, implying its compensating and supportive function in the form of green signals in green outputs. This research could help executives and lawmakers, especially in developing countries to build innovative environmental strategies for business sustainability.

The effect of ESG performance on corporate green innovation

“…Instead, the analysis indicates that government regulation acts as a catalysing force, enhancing the influence of ESG on green innovation. This is in line with Rauf et al (2024), who highlighted the critical role of ESG reporting in amplifying the impact of green R&D investment, suggesting a synergistic approach to driving corporate green innovation performance. Under the supervision of the government on enterprises, in order to reduce the adverse factors such as violation costs and other costs caused by government supervision, enterprises consciously strengthen their performance in ESG so as to improve the performance of ESG to a certain extent, thus enhancing the role of ESG performance in promoting green innovation.…”