IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i17p7509-d1467453.html
   My bibliography  Save this article

The Impact of Environmental Protection Tax on Green Innovation of Heavily Polluting Enterprises in China: A Mediating Role Based on ESG Performance

Author

Listed:
  • Yihui Duan

    (School of Engineering, University of Manchester, Manchester M13 9PL, UK)

  • Amir Rahbarimanesh

    (School of Engineering, University of Manchester, Manchester M13 9PL, UK)

Abstract

This article selects 2992 Chinese heavily polluting listed companies on the Shanghai and Shenzhen stock markets from 2014 to 2022 as research samples and conducts a natural experiment based on the implementation of the Environmental Protection Tax Law in 2018. The empirical study investigates the impact of the implementation of the Environmental Protection Tax Law on green innovation in heavily polluting enterprises using the difference-in-differences method. The research finds that the levy of environmental protection tax is beneficial for improving the level of corporate ESG performance, thereby enhancing the green innovation capability of heavily polluting enterprises. At the same time, the promotion of green innovation levels in heavily polluting enterprises by the Environmental Protection Tax Law mainly depends on strategic green innovation rather than substantive green innovation. Moreover, the impact of environmental protection tax on enterprises of different natures and scales varies significantly. Environmental protection taxes have notably enhanced green innovation levels more in state-owned enterprises than their non-state-owned counterparts. Similarly, large-scale enterprises have seen a more substantial increase in green innovation due to environmental protection taxes than smaller enterprises. In addition, corporate ESG performance plays a mediating role in the impact of environmental protection taxes on green innovation in heavily polluting enterprises. From the dual perspectives of environmental protection taxes and corporate ESG performance, this paper proposes ideas for the improvement of green innovation levels in heavily polluting enterprises. At the same time, it provides empirical evidence for the economic consequences of environmental protection taxes and corporate ESG performance and suggests that enterprises improve their green innovation system and enhance the quality of ESG information disclosure. The government is improving the system of environmental taxation and ESG information disclosure, enhancing public awareness of environmental protection, and exercising supervision over energy supply.

Suggested Citation

  • Yihui Duan & Amir Rahbarimanesh, 2024. "The Impact of Environmental Protection Tax on Green Innovation of Heavily Polluting Enterprises in China: A Mediating Role Based on ESG Performance," Sustainability, MDPI, vol. 16(17), pages 1-20, August.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:17:p:7509-:d:1467453
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/17/7509/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/17/7509/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Francesco Gangi & Mario Mustilli & Lucia Michela Daniele & Maria Coscia, 2022. "The sustainable development of the aerospace industry: Drivers and impact of corporate environmental responsibility," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 218-235, January.
    2. Chengli Shu & Kevin Z. Zhou & Yazhen Xiao & Shanxing Gao, 2016. "How Green Management Influences Product Innovation in China: The Role of Institutional Benefits," Journal of Business Ethics, Springer, vol. 133(3), pages 471-485, February.
    3. Defeng Yang & Aric Xu Wang & Kevin Zheng Zhou & Wei Jiang, 2019. "Environmental Strategy, Institutional Force, and Innovation Capability: A Managerial Cognition Perspective," Journal of Business Ethics, Springer, vol. 159(4), pages 1147-1161, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dan Huang & Jie Cheng & Xiaofeng Quan & Yanling Wu, 2024. "Managerial attention to environmental protection and corporate green innovation," Review of Quantitative Finance and Accounting, Springer, vol. 63(3), pages 1047-1081, October.
    2. Hameeda A. AlMalki & Christopher M. Durugbo, 2023. "Systematic review of institutional innovation literature: towards a multi-level management model," Management Review Quarterly, Springer, vol. 73(2), pages 731-785, June.
    3. Yang, Yang & Jiang, Yan, 2023. "Does suppliers’ slack influence the relationship between buyers’ environmental orientation and green innovation?," Journal of Business Research, Elsevier, vol. 157(C).
    4. Qiansong Zhang & Taiwen Feng & Long Cheng & Qingsong He, 2022. "Institutional force and firm performance: Do employee green involvement and flexibility‐oriented culture matter?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 950-964, July.
    5. Yalin Jiang & Wei Cai & Yu Wang, 2024. "Change starts within: does managerial ability matter to green innovation?," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-14, December.
    6. Jiawang Tang & Along Liu & Jibao Gu & Hefu Liu, 2024. "Can CEO environmental awareness promote new product development performance? Empirical research on Chinese manufacturing firms," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 985-1003, February.
    7. Wei Jiang & Liwen Wang & Kevin Zhou, 2022. "Green Practices and Customer Evaluations of the Service Experience: The Moderating Roles of External Environmental Factors and Firm Characteristics," Post-Print hal-04015637, HAL.
    8. Ullah, Farid & Jiang, Ping & Elamer, Ahmed A. & Owusu, Andrews, 2022. "Environmental performance and corporate innovation in China: The moderating impact of firm ownership," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    9. Zhou, Min & Govindan, Kannan & Xie, Xiongbiao & Yan, Liang, 2021. "How to drive green innovation in China's mining enterprises? Under the perspective of environmental legitimacy and green absorptive capacity," Resources Policy, Elsevier, vol. 72(C).
    10. Zhengxia He & Leyi Kuai & Jianming Wang, 2023. "Driving mechanism model of enterprise green strategy evolution under digital technology empowerment: A case study based on Zhejiang Enterprises," Business Strategy and the Environment, Wiley Blackwell, vol. 32(1), pages 408-429, January.
    11. Wei Jiang & Kui Wang & Kevin Zheng Zhou, 2023. "How Political Ties and Green Innovation Co-evolve in China: Alignment with Institutional Development and Environmental Pollution," Journal of Business Ethics, Springer, vol. 186(4), pages 739-760, September.
    12. Forcadell, Francisco Javier & Úbeda, Fernando & Aracil, Elisa, 2021. "Effects of environmental corporate social responsibility on innovativeness of spanish industrial SMEs✰,✰✰,★,★★," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    13. Wei Jiang & Liwen Wang & Kevin Zheng Zhou, 2023. "Green Practices and Customer Evaluations of the Service Experience: The Moderating Roles of External Environmental Factors and Firm Characteristics," Journal of Business Ethics, Springer, vol. 183(1), pages 237-253, February.
    14. Febi Jensen & Hans Lööf & Andreas Stephan, 2020. "New ventures in Cleantech: Opportunities, capabilities and innovation outcomes," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 902-917, March.
    15. Md. Ahashan Habib & Md. Rezaul Karim & Marzia Dulal & Mohammad Shayekh Munir, 2022. "Impact of Institutional Pressure on Cleaner Production and Sustainable Firm Performance," Sustainability, MDPI, vol. 14(24), pages 1-25, December.
    16. Luo, Lianfa & Cheng, Zhiming & Ye, Qingqing & Cheng, Yanjun & Smyth, Russell & Yang, Zhiqing & Zhang, Le, 2024. "Nonmonetary awards and innovation: Evidence from winning China's Top Brand Contest," China Economic Review, Elsevier, vol. 86(C).
    17. Rubio-Andrés, Mercedes & Ramos-González, Mª del Mar & Sastre-Castillo, Miguel Ángel & Gutiérrez-Broncano, Santiago, 2023. "Stakeholder pressure and innovation capacity of SMEs in the COVID-19 pandemic: Mediating and multigroup analysis," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    18. Chih-Hsing Liu & Quoc Phong La & Yen-Ling Ng & Rullyana Puspitaningrum Mamengko, 2023. "Discovering the Sustainable Innovation Service Process of Organizational Environment, Information Sharing and Satisfaction: The Moderating Roles of Pressure," Sustainability, MDPI, vol. 15(14), pages 1-26, July.
    19. Yingqi Wei & Sasa Ding & Ziko Konwar, 2022. "The two faces of FDI in environmental performance: a meta-analysis of empirical evidence in China," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 20(1), pages 65-94, January.
    20. Tang, Linjia & Guo, Yingying & Zha, Jianfeng & Zheng, Weiwei, 2024. "Acquiescence or Redemption: CEO’s early-life experience of environmental pollution and corporate green innovation," Journal of Business Research, Elsevier, vol. 173(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2024:i:17:p:7509-:d:1467453. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.