Does Green Finance Policy Contribute to ESG Disclosure of Listed Companies? A Quasi-Natural Experiment from China

Abstract

In 2016, the People’s Bank of China (PBC) together with multiple departments issued the Guidance on Building a Green Financial System (the Guidance), which marked a great breakthrough in China’s green finance policy. Aiming to clarify the actual impact and underlying mechanisms of green finance policy on Chinese listed companies’ ESG disclosure quality, this study employs the difference-in-differences (DID) model and examines the impact of the Guidance on ESG disclosure practices of A-share listed companies on the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) during the period 2006 to 2022. This study reveals a positive correlation between the Guidance and listed companies’ ESG disclosure. Upon further examination, it becomes evident that the Guidance has a more noticeable positive impact on the quality of ESG disclosure among listed companies that operate in industries with high levels of pollution, state-owned enterprises, and regions that exhibit greater levels of economic development. This paper provides essential insights to policymakers, facilitating a deeper understanding and more thorough assessment of the economic implications of green finance policies. Additionally, it acts as a strategic resource for listed companies, guiding the enhancement of corporate ESG disclosures and the implementation of ESG strategies influenced by green finance policies.