The Role of Environmental Regulations in Shaping Companies' ESG Performance: Evidence from China's Prevention and Control of Atmospheric Pollution

This study investigates the impact of environmental regulatory policies on corporate Environmental, Social, and Governance (ESG) performance, utilizing China's atmospheric pollution prevention and control policies as a quasi-experiment. Employing a difference-in-differences model and utilizing data from Chinese A-share listed companies in Shanghai and Shenzhen spanning from 2009 to 2022, the study empirically examines the relationship between atmospheric pollution prevention and control policies and corporate ESG performance. The results reveal a significant positive association between atmospheric pollution prevention and control policies and the ESG performance of listed companies, a relationship that withstands various robustness tests. Furthermore, heterogeneity analysis indicates that the impact of atmospheric pollution prevention policies is more pronounced among state-owned enterprises and highly polluting enterprises. These findings underscore the critical role of environmental regulations in driving corporate sustainability practices and have implications for policymakers and practitioners seeking to promote sustainable development initiatives.