How the Belt and Road Initiative Transforms Corporate ESG Performance: Insights from China's Experience

This study examines the transformative potential of the Belt and Road Initiative (BRI) in enhancing the environmental, social, and governance (ESG) performance of Chinese companies, carrying significant implications for global sustainable development. Using data from Chinese listed companies from 2009 to 2022, we employ a difference-in-differences approach to rigorously assess the impact of the BRI on corporate ESG performance and elucidate the underlying mechanisms. Our findings indicate that the BRI significantly enhances corporate ESG performance, with these results robustly validated through robustness checks. The analysis identifies two primary channels through which the BRI affects ESG performance: internal mechanisms, such as fostering technological innovation and enhancing environmental disclosure, and external mechanisms, including increased analyst attention and the expansion of digital infrastructure. Additionally, we observe significant variation in the BRI's impact across different industries and firm characteristics. Specifically, non-state-owned enterprises, high-growth companies, large corporations, and those located in economically advanced regions exhibit the most pronounced positive effects. This research not only deepens the understanding of the BRI's influence on sustainable business practices but also provides valuable insights for policymakers and corporate leaders. By leveraging the BRI, companies can significantly enhance their ESG performance, thus contributing to broader sustainability objectives. Our findings underscore the importance of strategic engagement with global initiatives like the BRI in achieving improvements in corporate sustainability such as enhanced environmental performance and social responsibility.