Local environmental goal constraint intensity and corporate ESG performance: An empirical observation based on China

Improving Environmental, Social, and Governance (ESG) performance has become an important international standard for measuring green and sustainable corporate development. This paper empirically finds that increasing local environmental goal constraint intensity significantly improves the ESG performance of heavy polluters based on data from Chinese A-share heavily polluting companies from 2012 to 2021. Mechanism analysis suggests that imposing local environmental goal constraints can improve ESG performance by promoting the development of green technological innovation and increasing media attention. This effect is more evident in non-state-owned, high-market value pressure companies, and cities with lower fiscal revenues and more industrial output in GDP. These findings hold significant implications for policymakers who seek to propose more effective incentive strategies.