On the fast track: The benefits of ESG performance on the commercial credit financing

Abstract

Abstract Under the strategy of sustainability, whether a company can increase its financing capacity by improving environmental, social, and governance (ESG) performance is vital to promoting its high-quality development. Based on China's A-share listed companies from 2009 to 2021, this study empirically examines the impact of corporate ESG performance on commercial credit financing (CCF). Following the research results, a company with better ESG performance is more likely to get CCF support from suppliers. Further analysis of the impact mechanisms shows that ESG performance can effectively reduce environmental, social, and governance risks by promoting green innovation, improving social reputation, and reducing operational risks, thereby improving the CCF of enterprises. Our work expands and enriches the theory of informal financing of enterprises, integrated with the more comprehensive assessment criteria for sustainable development.