The Impact of Environmental, Social, and Governance Performance on the Total Factor Productivity of Textile Firms: A Meditating-Moderating Model

Abstract

Today’s world is experiencing a great change that has not been seen in a hundred years, with a tense and complex world situation; under the influence of the Israeli–Palestinian conflict, trade friction between China and the U.S., and other events, enterprises need to choose good tactics to achieve strategic development. Environmental, Social, and Governance (ESG) is an indicator that measures the non-financial performance of an enterprise; this article takes listed companies in China’s textile industry from 2015 to 2022 as a research sample and utilizes a bi-directional fixed-effect model that controls for time and individuals to empirically analyze the relationship between ESG performance and corporate total factor productivity (TFP). The results show the following: (1) the better the corporate ESG performance, the higher the TFP; (2) the mechanism test results show that corporate ESG performance promotes TFP by improving green innovation capacity and enhancing corporate human capital, and green innovation and human capital play a partially mediating role; (3) the moderation test shows that agency costs play a weakening role in ESG performance, positively affecting corporate total factor productivity; (4) the heterogeneity analyses found that enterprises are more significantly affected by ESG among non-state-owned enterprises and in the central region. The results of the study provide empirical evidence to guide textile enterprises to actively fulfill ESG performance to enhance enterprise total factor productivity and achieve high quality and sustainable development.