Study on the Impact of Corporate Performance on ESG Performance from a Sustainability Perspective

Abstract

Current academia predominantly focuses on "how ESG affects corporate performance," with insufficient exploration of the reverse causality, i.e., the intrinsic logic of how performance impacts ESG. As a crucial lever for enterprises to implement new development concepts and achieve high-quality development, ESG practice relies on corporate performance for its essential resource foundation. Based on a sustainability research perspective, this paper uses A-share main board listed companies on the Shanghai and Shenzhen Stock Exchanges from 2011–2022 as a research sample. It focuses on the impact of corporate financial performance (CFP) on Environmental, Social, and Governance (ESG) performance, providing an important supplement to existing research. The study indicates: (1) An improvement in corporate profitability has a significant positive driving effect on ESG performance. Strong economic benefits are an important material basis for active ESG implementation. (2) Further analysis reveals significant regional heterogeneity in this relationship. It is more pronounced in the economically developed eastern regions, but relatively weak or even insignificant in the central and western regions, reflecting the differential impact of regional development levels on ESG practices. Furthermore, the study verifies the reliability of its conclusions through robustness checks and the instrumental variable (IV) method for addressing endogeneity. Finally, this paper proposes policy recommendations from the corporate, regional, and regulatory levels to guide the transformation of corporate performance resources into ESG investment, promoting the enterprise transition from "short-term profitability" to "synergy between performance and sustainable development."