Global geopolitical risk and corporate ESG performance

Abstract

This study investigates whether and how the global geopolitical risk (GPR) impacts the environmental, social, and governance (ESG) performance of Chinese enterprises utilizing panel data of Chinese A-share listed enterprises from 2011 to 2020. The findings show that enterprises' ESG performance is negatively impacted by the global GPR. According to heterogeneity analysis, the global GPR has a more detrimental effect on ESG performance in non-state-owned enterprises, enterprises in the decline period, enterprises with higher institutional investor shareholdings, and enterprises without political connections. Additional mechanism analysis reveals that global GPR primarily weakens Chinese enterprises' ESG performance by increasing their financing constraints and reducing competitiveness. . In conclusion, our main findings are still valid after addressing endogeneity-related concerns and doing robustness tests.