Blessing or curse: How does sustainable development policy affect total factor productivity of energy-intensive enterprises?

The achievement of sustainable development in energy-intensive sectors is crucial for promoting long-term economic growth and stability. Utilizing the National Sustainable Development Plan for Resource-based Cities (2013–2020) (SDP) in China as a quasi-experiment, we examine the effect of sustainable development policy on the productivity performance of energy-intensive firms. Our analysis of data from Chinese listed companies between 2006 and 2020 reveals that the SDP significantly enhances the productivity performance of treated firms. Our investigation into the pathways towards sustainability reveals that these firms rely on both resource reallocation and technological innovation to cope with the impact of the SDP. Specifically, firms with stronger environmental regulations and more human capital tend to accumulate total factor productivity growth through technological innovation, while firms with greater resource dependence and political connections tend to benefit more from resource reallocation efforts. By exploring the mechanisms through which these policies impact productivity and sustainability, we provide valuable information for policymakers and managers to embrace heterogenous technology pathways towards sustainable development.