Can ESG ratings promote corporate greening? --Validation based on the double difference method

Abstract

Drawing on comprehensive data from China’s A-share listed companies over the 2009 to 2021 period, this study utilizes a multi-period difference-in-differences (DiD) model to investigate corporate green transformation in detail. This approach is innovative in its use of green patent licenses and core green licenses as primary indicators, chosen to accurately assess the degree of transformation in environmental sustainability initiatives. The analysis reveals that the introduction of ESG ratings exerts a significant positive influence on corporate green development, as reflected in marked improvements in these green indicators after ESG ratings are adopted. Such findings underscore the important role of ESG ratings in driving sustainable business practices and provide robust evidence that ESG mechanisms are essential in promoting green transformation across enterprises. Based on these insights, it is recommended that governmental bodies intensify the promotion and implementation of green financial policies, which would offer more substantial policy backing for enterprises striving toward green and sustainable growth.