Firm-level carbon risk perception and ESG performance

Area of Science:

• Economics
• Environmental Science
• Business Management

Background:

• Limited research exists on the link between corporate carbon risk perception and Environmental, Social, and Governance (ESG) performance.
• Understanding this relationship is crucial for fostering sustainable economies and corporate responsibility.

Purpose of the Study:

• To investigate the impact of firm-level carbon risk perception on ESG performance.
• To explore the moderating roles of analyst coverage and media attention.
• To identify the mechanisms through which carbon risk perception influences ESG components (E, S, and G).

Main Methods:

• Empirical analysis of Chinese A-share listed firms from 2011 to 2020.
• Regression analysis to determine the relationship between carbon risk perception and ESG scores.
• Moderation analysis to assess the influence of analyst coverage and media attention.

Main Results:

• A significant positive relationship was found between a firm's perception of carbon risk and its ESG performance.
• Analyst coverage and media attention were identified as significant moderators, strengthening the positive relationship.
• Carbon risk perception positively impacts Environmental (E), Social (S), and Governance (G) scores through distinct channels.

Conclusions:

• Increased awareness of carbon risks drives improvements in corporate ESG performance.
• External monitoring mechanisms like analyst coverage and media attention enhance the effectiveness of carbon risk perception on ESG.
• The study provides valuable insights for promoting ESG practices and corporate sustainability.