Unforeseen benefits: Can ESG enhance corporate access to commercial credit financing?

Amidst the escalating global focus of investors and regulators on environmental, social, and governance (ESG) issues, ESG have emerged as pivotal indicators in assessing the holistic performance of firms. Despite this growing importance, there is a noticeable gap in research exploring how ESG can enhance a corporate commercial credit financing capability. This study utilizes a comprehensive panel dataset spanning 2010–2022 from Chinese A-share listed companies to thoroughly delves into the nexus between ESG and commercial credit financing. The results indicate a significant positive effect of ESG on commercial credit financing capabilities. ESG can significantly boost commercial credit financing by enhancing information transparency, optimizing supplier concentration, lowering operational risks, and curtailing managerial myopia. The influence of ESG on commercial credit financing shows differences between different firms. ESG significant improvements in commercial credit financing capacity following ESG upgrades, especially for non-heavily polluting, non-high-tech, technology-intensive, and labor-intensive firms. Heavily polluting, high-tech and capital-intensive firms experience relatively limited improvements in commercial credit financing. Our findings provide useful insights for policymakers and firms’ managers by underscoring the need to design specific ESG strategies that match with firm-industry idiosyncrasies to extract value from their exploitation, enabling further positive externality impact of ESG on commercial credit financing conditions.