The power of the public: air environmental concern and corporate ESG performance

Abstract

Purpose This study aims to investigate whether and how public air environmental concern (PAEC) affects corporate environmental, social and governance (ESG) performance in emerging markets. Design/methodology/approach This study measured PAEC using the Baidu index search keyword “雾霾 (PM2.5)” and assessed its impact on corporate ESG among Chinese A-share listed companies from 2011 to 2020 through regression analysis. Findings The empirical results indicate a positive relationship between PAEC and corporate ESG. Moreover, PAEC facilitates enhanced corporate ESG performance by mediating through corporate reputation and government environmental regulations. Heterogeneity analysis shows that the promotion effect of PAEC on ESG is more pronounced in the subgroups of companies with an excellent green image, low perceived uncertainty, strong management political connections, low short-termism, high industry technological levels and low pollution levels. Practical implications The practical implications of this study underscore the importance for policymakers, investors and companies to prioritize PAEC and its influence on corporate ESG performance. Originality/value This study contributes to ESG literature by highlighting the positive impact of external oversight, such as PAEC.