Can Environmental, Social and Governance Performance Alleviate Financial Dilemma?

In the context of the increasing emphasis on sustainable development, enterprises, as integral components of society, play a crucial role in realizing sustainable objectives. ESG (Environmental, Social, and Governance) principles serve as a significant avenue for businesses to promote sustainable development. However, due to the external nature of ESG, many enterprises fail to prioritize its importance. This paper delves into the relationship between ESG and corporate financing constraints. Through an analysis of data from all A-share listed companies in China spanning from 2009 to 2020, the study concludes that ESG practices can significantly alleviate corporate financing constraints. This finding suggests that motivating companies to prioritize ESG fulfillment can yield positive effects on their financing capabilities. Additionally, this research contributes to a deeper understanding of ESG-related outcomes and sheds light on the influencing factors of financing constraints.