Provincial ESG performance in China: Evolution trends and the role of environmental regulation

This study investigates the evolving patterns of environmental, social, and governance (ESG) performance at the provincial level in China, with a particular emphasis on the role of environmental regulations. It explores the dynamic landscape of ESG practices across various provinces, analyzing how these metrics have evolved over time. We found that from 2007 to 2022, the average environmental regulation index has declined from 0.4265 in 2007 to 0.3277 in 2022, signifying a decrease in the level of environmental regulation across the provinces in China over this period. Conversely, the average ESG performance has shown an upward trend, rising from 0.5560 in 2007 to 0.6585 in 2022, indicating an improvement in ESG performance among the provinces. In terms of overall impact, both energy consumption structure and level of openness act as mechanisms through which environmental regulation influences regional ESG. Specifically, reducing coal energy consumption structure can enhance the promotive effect of environmental regulation on ESG. Conversely, increasing environmental regulation levels reduce the regional openness level (−2.024***), resulting in a decrease in regional ESG. By examining the influence of environmental regulations on ESG outcomes, the research seeks to shed light on how regulatory frameworks shape sustainable practices and provincial responsibility.