Unity of knowing and action in ESG: impacts on total factor productivity and mechanisms

The consistency of ESG practices is crucial for corporate sustainability and governance. However, existing research mainly examines the economic effects of ESG disclosure while neglecting the impact of alignment between ESG disclosure and corporate actions on firm productivity. Using data from A-share listed companies in China (2014–2023), this study constructs an ESG Unity of Knowing and Action index and explores its effect on total factor productivity (TFP). The results show that: (1) A higher degree of ESG Unity of Knowing and Action enhances TFP, a finding robust across multiple tests; (2) This effect operates through improved accounting information comparability, reduced financing constraints, and optimized internal control quality; (3) The impact is more pronounced in non-state-owned enterprises, cross-listed firms, and large corporations; (4) When ESG performance is high, the positive effect weakens and may turn negative, indicating diminishing marginal returns. The findings provide novel theoretical insights and practical guidance for corporate ESG management and policymaking.