Corporate behavior under confusion: ESG disagreement and green innovation

Environmental, Social, and Governance (ESG) ratings of firms are divergent across data providers, which creates uncertainty about corporate sustainability. Using ESG rating data received by Chinese listed companies, we find that ESG ratings issued by different rating agencies generally have a low correlation. Empirical tests show that ESG disagreement inhibits firms' green innovation behavior. Corporate green innovation resources and green innovation intentions are potential channels through which ESG disagreement affects green innovation. Further analysis finds that the information environment, institutional environment, and industry differences influence the negative association between ESG disagreement and green innovation.