ORIGINAL RESEARCH article
Front. Sustain.
Sec. Quantitative Sustainability Assessment
Delving into How Low-Carbon Policies Ultimately Enhance Corporate ESG Performance: Evidence from China
Provisionally accepted
- 1China University of Petroleum, Beijing, Beijing, China
- 2Shanghai Normal University, Shanghai, China
- 3Rice University, Houston, United States
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Abstract: The low-carbon city pilot policy, led by the Chinese government as a comprehensive environmental regulatory initiative aimed at promoting the sustainable development of the economy, society, and environment, contributes to the enhancement of corporate ESG performance at the micro level. Using data from Chinese A-share listed companies between 2009 and 2022, this study employs a quasi-natural experiment design, leveraging the difference-in-differences (DID) method and counterfactual estimation techniques to assess the policy's impact. The analysis reveals three key findings: (1) The low-carbon city pilot policy significantly enhances corporate ESG performance, a result that remains consistent across various robustness checks, including pre-trend and placebo tests, alternative estimation models, and methods, as well as the exclusion of other policy interferences; (2) The improvement in corporate ESG performance is driven by three main mechanisms: sustained green innovation, improved quality of corporate information disclosure, and reduced corporate agency costs; (3) The policy's impact on corporate ESG performance varies based on property rights, industry type, and firm size, indicating heterogeneity in its effects, with stronger improvements observed for state-owned enterprises, heavily polluting industries, and large firms.
Keywords: low-carbon city pilot policies, Corporate ESG, Difference-in-differences method, Counterfactual estimation, Heavily polluting industries
Received: 15 Oct 2025; Accepted: 02 Dec 2025.
Copyright: © 2025 Du, Ma, Hou, Yang and Li. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
* Correspondence: Yongkang Hou
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