ESG and green transition of enterprises: a perspective from emission reduction and development

Using data from 2009 to 2020 of A-share listed firms in China, this study investigates how ESG (Environmental, social, and governance) impacts corporate green transition (GT) from two perspectives: carbon emission intensity and total factor productivity. Results show that ESG significantly enhances corporate GT. Channel analysis shows that ESG improves the financing environment, optimizes environmental governance strategies, and improves the information environment, thereby promoting corporate GT. After the implementation of the new Environmental Protection Law (EPL) and the Environmental Protection Tax Law (EPTL), the GT with ESG advantages is significantly enhanced compared to those without ESG advantages. Heterogeneity analysis shows that the positive effects of ESG are more pronounced in firms with low availability of green credit and high levels of greenwashing. In addition, social responsibility of ESG has the greatest effect in enhancing GT, and ESG uncertainty can weaken the promotion effect of ESG on GT. The industry spillover effect test found that ESG has an industry emission reduction governance effect, and there is a peer effect of mutual influence on carbon emissions decisions among enterprises. Overall, our results reveal that ESG can promote GT to achieve sustainable development. First published online 26 March 2026