How does green manufacturing enhance corporate ESG performance? - Empirical evidence from machine learning and text analysis.

Green manufacturing, widely recognized as a crucial avenue for companies to achieve sustainable competitive advantages, exerts significant spillover effects on both environmental protection and social responsibility. Accordingly, this can significantly enhance corporate Environmental, Social, and Governance (ESG) practices and enhance overall ESG performance. This study focuses on Chinese A-share listed firms between 2009 and 2022, characterizing their ESG performance. Employing quasi-natural experimental methods, this research evaluates the causal relationships and specific channels through which green manufacturing enhances corporate ESG performance. The findings demonstrate that green manufacturing significantly empowers companies to strengthen their ESG performance. Channel analysis indicates that enhanced green innovation capabilities and the reduction of financing constraints constitute two critical channels through which green manufacturing facilitates ESG performance improvement. Further analysis indicates that all three subsystems in the green manufacturing system significantly empower companies to enhance ESG performance to varying degrees, with the most significant empowerment effect observed in the environmental dimension of ESG performance. The analysis below indicates that the enhancement of corporate ESG performance yields dual benefits, reflected in both economic gains and reputational enhancements.