The industry peer effect of enterprise ESG performance: The moderating effect of customer concentration

This study empirically explores the industry peer effect on enterprise environmental, social, and governance (ESG) performance, and the impact of customer concentration on this effect. The results show that the ESG performance of listed firms has a significant industry peer effect and that customer concentration can inhibit the industry peer effect. After a series of robustness and endogeneity tests, the conclusions remained robust. Further analysis demonstrated that "management reputation consideration" and "competitive imitation" are potential drivers of the ESG performance peer effect. Moreover, customer concentration inhibited the industry peer effect on ESG performance by reducing agency costs and easing financing constraints. Heterogeneity analysis suggests that the inhibitory effect of customer concentration on ESG peer effect is more salient when the enterprise governance level is relatively poor and the market position is relatively low. The economic consequence test demonstrates that the industry peer effect on enterprise ESG performance reduces firm value, while customer concentration increases firm value by mitigating the ESG performance peer effect. This study reveals the industry interaction aggregation phenomenon of enterprises' ESG performance and its economic consequences, providing significant empirical evidence for enterprises to make reasonable ESG investment decisions.