The Impact of Carbon Emission Trading Policy on Enterprise ESG Performance: Evidence from China

The carbon emission trading system profoundly impacts enterprises’ sustainable development as an important market incentive environmental regulation tool. Through data collected from Chinese A-share listed enterprises in Shanghai and Shenzhen 2011 to 2019 Bloomberg ESG score data, this paper empirically analyses the impact of policy on enterprise performance its channel mechanism using difference-in-difference (DID) method. Results study indicate that improves significantly, robustness tests confirm these findings. Carbon can encourage enhance their R&D investments promote internal controls, ultimately enhancing performance. Additionally, positively low-carbon enterprises, where CEO is separated company, with a high degree digital transformation, receiving government subsidies. This extends our research into economic implications policy, enriching literature market-based policies’ With respect governments’ use regulate environmentally, provides theoretical guidance. It has significant practical for improving sustainability.