Determinants of ESG Performance in Chinese Financial Firms: Roles of Community Engagement, Firm Size, and Ownership Structure

This study examines the determinants of environmental, social, and governance (ESG) performance among Chinese financial institutions, with particular emphasis on community engagement, firm size, and ownership structure as drivers of ESG performance and their contribution to the Sustainable Development Goals (SDGs). Utilizing ESG ratings from CSRHub and annual reports from 107 financial companies spanning 2022–2024, hierarchical regression analyses demonstrate that community engagement significantly predicts ESG performance (β = 0.816, p < 0.001), explaining 67.7% of the variance in ESG ratings. Conversely, the firm (β = 5.687 × 10⁻⁶, p > 0.05) and the ownership structure (β = 1.35, p > 0.05) exhibit no statistically significant effect. Robustness evaluations, concerning bootstrapping methodologies and calculations of heteroscedasticity-consistent standard errors, check these findings. The cross-sectional design limits causal inference. Longitudinal studies would allow deeper exploration of temporal dynamics. The results specify that community engagement acts as the primary factor affecting ESG performance within Chinese financial institutions, whereas firm size and ownership structure exercise insignificant influence. Financial institutions should prioritize substantive, sustained community initiatives rather than relying on organizational scale or state affiliation. For policymakers, the findings suggest that incentive mechanisms (e.g., tax credits or green-finance subsidies) should reward verifiable community-impact outcomes rather than firm size or state ownership, which do not reliably predict superior ESG performance.