Climate transition risk and corporate environment, social and governance performance: Evidence from Chinese listed companies

Using a sample taken from Chinese A-share listed companies from 2010 to 2020, we explore the effect of climate transition risk on corporate environment, social and governance (ESG) performance. Our finding shows that climate transition risk promotes corporate ESG performance. In addition, we discover that equity incentives play an important positive moderating role in the above relationship. Compared with positive media tone, the positive effect of climate transition risk on corporate ESG performance is more significant under the moderating effect of a negative media tone. Further analyses find that there exists a more prominent relationship between climate transition risk and corporate ESG performance in non-state-owned enterprises, enterprises with more female directors, and enterprises in highly market-oriented regions. Our findings provide a reference to improve ESG practice to achieve corporate sustainable development and provide practical suggestions for better dealing with climate transition risk.