Research on the Impact of Corporate Financial Performance on Corporate ESG Performance

Against the backdrop of growing attention to the concepts of sustainable development and green development, a firm's Environmental, Social, and Governance (ESG) performance has increasingly become a critical factor in its development. Based on panel data of domestic Shanghai and Shenzhen A-share listed companies from 2011 to 2022, this paper uses a fixed-effects model to explore the impact of corporate financial performance on ESG performance and its mechanism. The study finds that financial performance significantly influences ESG performance to a certain extent, and mechanism tests reveal that this impact varies across industries and firm sizes. Accordingly, this research puts forward targeted policy recommendations to provide a reference for corporate managers in strategy formulation, investors in decision-making, and regulatory authorities in policy improvement, thereby helping enterprises achieve the synergistic enhancement of financial performance and ESG performance and promoting the sustainable development of capital markets.