Research on the impact of energy transition policies on corporate ESG performance.

Energy transition policies are pivotal in fostering green economic growth and addressing environmental pollution. However, their potential negative effects on businesses remain underexplored. This paper examines the impact of energy transition policies on corporate ESG (Environmental, Social, and Governance) performance by leveraging a quasi-natural experiment based on the New Energy Demonstration City (NEDC) policy. Using data from Chinese A-share listed companies from 2009 to 2019 and employing a difference-in-differences (DID) model, this paper finds that the NEDC policy significantly hinders corporate ESG performance. This negative impact is primarily driven by heightened financial constraints, reduced green innovation, and increased bankruptcy risks. Furthermore, the adverse effects are more pronounced in industries characterized by high competition and high pollution. These findings highlight the challenges that energy transition policies pose to corporate sustainability and underscore the need for policymakers to design measures that mitigate these difficulties while advancing environmental objectives.