The impact of green public procurement on corporate ESG performance

Green Public Procurement (GPP), as a fiscal policy tool for environmental governance, plays a crucial role in achieving sustainable production and consumption. Amidst the push for sustainable development, the effectiveness of GPP in enhancing enterprise ESG performance is a widespread concern. Utilizing data from Chinese listed companies between 2015 and 2023, this study manually gathers information from the government procurement list of environmental labeling products and energy-saving products on the Chinese government procurement website to assess the impact and pathways of GPP on corporate ESG performance. The findings reveal that GPP significantly improves firms' ESG performance, the conclusion validated through various robustness tests. This procurement strategy encourages enterprises to boost green investments and attracts specific investors, thereby stimulating better ESG outcomes. Notably, off-site and mandatory green procurement have a more pronounced effect on ESG performance. Additionally, enterprises with strong resource acquisition capabilities, lower information disclosure transparency, and larger scales experience a stronger incentive effect from GPP. Furthermore, increased GPP for client enterprises can also spur improved ESG performance among upstream enterprises. This study contributes to the literature on the economic impacts of GPP and offers valuable insights for enhancing green government tools and promoting ESG practices within enterprises.