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The Impact of China’s ETS on Corporate Green Governance Based on the Perspective of Corporate ESG Performance

Author

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  • Riquan Yao

    (Huzhou Power Supply Company, State Grid Zhejiang Electric Power Co., Ltd., Huzhou 313000, China)

  • Yingqun Fei

    (Huzhou Power Supply Company, State Grid Zhejiang Electric Power Co., Ltd., Huzhou 313000, China)

  • Zhong Wang

    (Huzhou Power Supply Company, State Grid Zhejiang Electric Power Co., Ltd., Huzhou 313000, China)

  • Xin Yao

    (China Center for Energy Economics Research, School of Economics, Xiamen University, Xiamen 361005, China)

  • Sasa Yang

    (China Center for Energy Economics Research, School of Economics, Xiamen University, Xiamen 361005, China)

Abstract

To achieve China’s “dual carbon” and common prosperity goals, corporate green governance is crucial. A key tool for promoting green growth is environmental legislation, particularly market-based regulation. With China’s carbon emission trading as a natural experiment, we adopt the DID method to quantitatively compare the gap between ESG performance of pilot and non-pilot carbon trading enterprises before and after policy implementation, thereby examining the impact, mechanism and optimization conditions of market-based environmental policy on corporate green governance based on panel data of China’s A-share listed companies from 2007 to 2019. In addition, PSM-DID and other methods are employed for preventing estimation bias caused by sample self-selection bias. It is found that: (1) the green governance level of pilot firms can be considerably improved by a carbon emission trading scheme (ETS); (2) the ETS primarily encourages enterprises to uphold their ESG obligations through increasing regulatory pressure from the government and corporate involvement in clean innovation; (3) enhancing regional marketization can strengthen the impact of carbon trading policy, and enterprises that are large and non-state-owned exhibit better performance with regard to green governance as a result of carbon trading policy. This paper provides practical experience for promoting corporate green governance to achieve the “dual carbon” goal based on a market mechanism from a micro perspective.

Suggested Citation

  • Riquan Yao & Yingqun Fei & Zhong Wang & Xin Yao & Sasa Yang, 2023. "The Impact of China’s ETS on Corporate Green Governance Based on the Perspective of Corporate ESG Performance," IJERPH, MDPI, vol. 20(3), pages 1-16, January.
    • Handle: RePEc:gam:jijerp:v:20:y:2023:i:3:p:2292-:d:1048538
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    Cited by:

    1. Liu, Ailan & Dai, Sijia & Wang, Zhixuan, 2023. "Environmental protection tax on enterprise environmental, social and governance performance: A multi-perspective analysis based on financing constraints," Journal of Asian Economics, Elsevier, vol. 89(C).
    2. Yan Ma & Pei Liu & Haonan Chen, 2024. "Corporate ESG Performance, Green Innovation, and Green New Quality Productivity: Evidence from China," Sustainability, MDPI, vol. 16(22), pages 1-21, November.
    3. Yadu Zhang & Yiteng Zhang & Zuoren Sun, 2023. "The Impact of Carbon Emission Trading Policy on Enterprise ESG Performance: Evidence from China," Sustainability, MDPI, vol. 15(10), pages 1-27, May.

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