TYPE Hypothesis and Theory

PUBLISHED 03 October 2022

DOI 10.3389/fenvs.2022.1015764

Environmental, social,
OPEN ACCESS governance disclosure and
EDITED BY
Xiaodong Yang,
Xinjiang University, China
corporate sustainable growth:
REVIEWED BY
Cunyi Yang,
Evidence from China
Sun Yat-sen University, China
Shikuan Zhao,
Chongqing University, China
Nannan Wang 1, Dayao Li 2,3*, Dengfeng Cui 1 and Xiaolong Ma 4
Jinning Zhang, 1
School of Economics and Management, Shihezi University, Shihezi, China, 2Beibu Gulf University,
Shandong University, China
Qinzhou, China, 3Qinzhou Structural Health Monitoring Engineering Technology Research Center,
*CORRESPONDENCE Qinzhou, China, 4Zhengzhou University of Industry Technology, Zhengzhou, China
Dayao Li,
[email protected]

SPECIALTY SECTION
This article was submitted to
The ultimate goal of business development is to achieve sustainable corporate
Environmental Economics and
Management, growth and maximize shareholder wealth. Whether and how ESG disclosure
a section of the journal affects sustainable growth needs to be further explored. Combining stakeholder
Frontiers in Environmental Science
theory and signaling theory, a panel data test based on 300 listed companies in
RECEIVED 11 August 2022 Shanghai and Shenzhen in China finds that ESG disclosure can positively
ACCEPTED 15 September 2022
PUBLISHED 03 October 2022 promote sustainable growth compared with companies that do not disclose
CITATION
ESG disclosure, and the higher the level of ESG disclosure, the greater the
Wang N, Li D, Cui D and Ma X (2022), promotion effect on sustainable growth; and ESG disclosure further enhances
Environmental, social, governance sustainable growth by reducing financing constraints and enhancing human
disclosure and corporate sustainable
growth: Evidence from China. capital. In addition, the positive relationship between ESG disclosure and
Front. Environ. Sci. 10:1015764. corporate sustainable growth is particularly pronounced for non-
doi: 10.3389/fenvs.2022.1015764
environmentally sensitive industries and when external environmental
COPYRIGHT uncertainty intensifies. Our findings enrich the research related to ESG
© 2022 Wang, Li, Cui and Ma. This is an
open-access article distributed under disclosure, provide motivation to motivate firms to consciously practice ESG
the terms of the Creative Commons disclosure from a sustainable growth perspective, and contribute to a more
Attribution License (CC BY). The use,
detailed understanding of the mechanisms of ESG disclosure and sustainable
distribution or reproduction in other
forums is permitted, provided the corporate growth.
original author(s) and the copyright
owner(s) are credited and that the
KEYWORDS
original publication in this journal is
cited, in accordance with accepted ESG disclosure, corporate sustainable growth, financing constraints, human capital,
academic practice. No use, distribution environmentally sensitive industries
or reproduction is permitted which does
not comply with these terms.
Introduction
In recent years, with the introduction of the United Nations “2030 Sustainable
Development Goals”, the concept of responsible investment, which implements
environmental, social and governance principles, has been gaining popularity. ESG is
an acronym for Environment, Social and Governance, an investment concept and
corporate evaluation standard that focuses on the environmental, social and
governance performance of companies rather than financial performance. Investors
can assess the contribution of companies in promoting sustainable economic
development and fulfilling social responsibility by observing corporate ESG. Among
them: Environment (E) focuses on the impact of enterprise operation and investment

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Wang et al. 10.3389/fenvs.2022.1015764

activities on the environment, such as resource utilization and competitiveness among peers, help investors understand
pollutant emission. Social (S) focuses on the relationship between corporate operations and sustainable development, reduce
the company, focuses on the coordination and balance between information asymmetry between insiders and external
the company and its stakeholders. Governance (G) focuses on the investors, and lay the foundation for sustainable growth of
internal governance structure and governance rules of the enterprises (Lins et al., 2017; Xie et al., 2019). On the other
company (Duuren et al., 2016; Liu et al., 2022). ESG hand, ESG disclosure strengthens consumers’ understanding of
investment is highly compatible with China’s goal of green the company and enhances customer stickiness, thus improving
and low-carbon transformation and is a powerful tool to corporate performance (Clemons et al., 2017; Lin et al., 2015).
promote low-carbon transformation and sustainable Furthermore, actively practicing ESG and timely disclosure will
development of enterprises. Therefore, studying the attract excellent employees, enhance corporate social influence,
relationship between ESG disclosure and sustainable corporate and improve corporate reputation (Broadstock et al., 2020; Su
growth is the basis for implementing the development of ESG et al., 2021). 2) ESG disclosure is also accompanied by certain
concept. Based on the current background of significantly risks and costs, which bring loss effects. In a competitive market,
increased environmental uncertainty, combined with the information disclosure may lead to leakage of core technologies,
importance and inevitability of ESG development in China, and competitors may make appropriate strategies to take
the study of ESG disclosure is of great practical significance advantage of the company’s competitive advantage based on
(Li et al., 2022; Zhang et al., 2022). the information obtained, resulting in damage to corporate value
Compared with the ESG development process in foreign (Xi, 2010); Not only that, but despite the increasing use of
countries and Hong Kong, China, ESG construction in mainland environmental, social and governance (ESG) ratings, It can
China is relatively backward and still in the initial stage of also have a negative impact. Christensen et al. (2022)
development, mainly because mainland China adopts the conclude that ESG disclosures often exacerbate the divergence
voluntary principle for ESG report disclosure, while the Hong in ESG ratings. In addition, information disclosure may also
Kong Stock Exchange follows mandatory disclosure intensify the “irrational” behavior of managers and lower
requirements (Luo et al., 2022). In recent years, stock monitoring costs lead to a higher likelihood of overregulation
exchanges and the Securities and Futures Commission have by shareholders (Hahn and Kühnen, 2013), while managers may
also made further regulations on corporate environmental, engage in activities that reduce corporate value in order to
social as well as governance disclosure and proposed a core demonstrate their capabilities and take away corporate
index system for measuring ESG performance of listed resources for their private benefit, resulting in the destruction
companies to further promote the development of ESG in of the trust relationship between managers and shareholders and
China. According to the White Paper on ESG Development of the reluctance of shareholders to invest in high cost innovation
Chinese Listed Companies (2021), a total of 1092 A-share listed activities, which ultimately has a negative impact on sustainable
companies in China have issued ESG reports for 2020 (Chen, corporate growth (Hermalin and Weisbach, 2012).
2021). Compared with the ESG disclosure of listed companies in The above studies have deepened the consequences of ESG
Europe and the US, which has exceeded 60% in the same period, disclosure, but there is no consistent conclusion on the impact of
the number of companies issuing ESG disclosure reports in ESG disclosure on business operations, and the question of
China only accounts for 25.3% of the number of all A-share whether there is spillover effect or loss effect of ESG
listed companies, which It is significantly behind the European disclosure needs to be further explored. China is still in the
and American countries. This indicates that the ESG concept of early stages of ESG development, and investors and firms do not
some listed companies in China has been gradually improved, yet have a clear understanding of the specific effects of ESG
but the overall level is not yet high. How to stimulate the activities on corporate performance and the mechanisms of their
autonomy of corporate ESG disclosure and provide interactions. Therefore, it is of practical value to provide
endogenous motivation for corporate ESG disclosure is an endogenous motivation for companies to actively invest in
urgent issue to be solved at present. ESG by studying the sustainable growth consequences of ESG
Studies have been conducted to explore the basic logic of disclosure (Wu et al., 2021; Zhao et al., 2022). Based on the above
information disclosure from the perspective of the results analysis, this paper takes China, a representative emerging
brought by ESG disclosure, and there are mainly two views market country, as an example to study the impact of ESG
on the spillover and loss effects of ESG disclosure; 1) ESG disclosure on sustainable corporate growth and its intrinsic
disclosure strengthens links with stakeholders and brings impact mechanism; on this basis, it further explores the
spillover effects. Based on stakeholder theory, on the one differences in its impact under different industry types and
hand, ESG disclosure conveys more information about external environments. The contribution and significance of
corporate attributes to external investors, and timely this study are mainly reflected in the following four aspects.
disclosure of environmental information by enterprises will First, socially responsible investment as an important
gain government support, public recognition, and good implementation tool for sustainable development, scholars

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have explored the impact of responsible investment on corporate requirements still do not cover all listed companies, and there is
business activities from different perspectives, but no study has no unified disclosure framework and rules; there is no mandatory
explored the impact of ESG disclosure from the perspective of disclosure at the social and governance levels; and the overall
sustainable growth, and this study innovatively explores the disclosure framework of ESG still needs to be improved (Tsang
impact of ESG disclosure on corporate sustainable growth. et al., 2021). As of 15 April 2022, China Securities Regulatory
Second, current findings on the impact of ESG disclosure are Commission issued the “Guidelines on Investor Relations
inconsistent. This paper examines the effect of ESG disclosure on Management for Listed Companies (2022)", which includes
corporate sustainable growth based on a cross-period perspective “ESG information” for the first time in the communication
combined with a double difference approach (DID), and the content of investor relations management. The next step is for
findings further support the incentive effect of ESG disclosure the Chinese government and regulators to further improve
and provide empirical evidence for the positive effect of ESG relevant laws and regulations, strengthen the mandatory
disclosure. Third, further analysis yields the mechanisms of the disclosure of environmental and climate information, actively
role of financing constraints and human capital in ESG disclosure learn from international disclosure experience, and promote the
to influence the sustainable growth of firms to play, and explores formation of easy to understand, applicable and comparable
the effects of external environmental uncertainty and industry information disclosure guidelines or standards.
heterogeneity in order to more clearly understand the intrinsic
mechanisms and external conditions of ESG disclosure to
influence sustainable growth of firms. Fourth, this study also Literature reviews and hypothesis
has some practical value, and the findings provide empirical development
evidence for enterprises to actively disclose ESG information and
improve ESG performance to enhance corporate sustainable With the advancement of digital technology, the
growth, and provide new ideas to promote enterprises to dissemination of Internet information is more effective in
practice the concept of green development and achieve high- playing the role of ESG disclosure, urging companies to
quality development. improve energy production efficiency and reduce energy
consumption in order to achieve green and sustainable
development (Hao et al., 2022; Ren et al., 2022). The ESG
Institutional background and disclosure system is an important basic system for the capital
hypothesis development market to implement the goals of carbon peaking and carbon
neutrality. Currently, most ESG reports of Chinese A-share listed
The institutional background of ESG companies are voluntary disclosures, and a small number of
disclosure in China constituent companies have social responsibility reporting
requirements. Driven by policies and the market, ESG
Globally, ESG disclosure is mainly divided into mandatory disclosure by Chinese listed. However, from an overall
disclosure and voluntary disclosure (He et al., 2019). Mandatory perspective, the quantity of ESG information disclosure by
disclosure requirements make companies improve their listed companies has increased, but the quality varies widely
environmental, social responsibility and corporate governance and is uneven. The quality of ESG disclosure varies widely and
to provide a good environment for socioeconomic development unevenly. Therefore, in order to solve the worries of ESG
(Jannis and Hloger, 2013). In terms of global sustainability investment, we should pay attention to whether ESG
reporting tools, about two-thirds are mandatory disclosure disclosure can bring sustainable growth of enterprises under
tools and about one-third are voluntary disclosure tools. The the complex and changing external environment and the
reason for the low disclosure of ESG information for listed continuous impact of the COVID-19 (Tampakoudis and
companies in China at present may be that regulators have Anagnostopoulou, 2020).
not yet introduced mandatory ESG disclosure for all listed From the existing studies on the enhancing effect of ESG on
companies, and the specific requirements for environmental, business performance (Friede et al., 2015; Hakan and Peng,
social and governance dimensions are not uniform. For the 2021), it can be hypothesized that ESG disclosure helps to
environmental level, the CSRC revised the content and format promote sustainable corporate growth. In terms of the direct
of semi-annual and annual reports in 2017 and introduced a impact effect, ESG reporting serves as a commitment tool to
mandatory environmental information disclosure system for constrain firms to adopt ethical behavior (Barkó et al., 2021), and
some listed companies. For the governance level, it revised the this ethical behavior serves as an insurance policy that the share
Code on Governance of Listed Companies in 2018 and revised price of a firm will fall less even when it is involved in a related
the format and guidelines for periodic reports of listed companies scandal (Godfrey, 2005); In addition, ESG disclosure can bring
again in 2021 to further improve the relevant requirements; about increased information transparency, which helps
however, the environmental information mandatory disclosure stakeholders to better understand the operations and future

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development of the firm, reducing adverse selection risk (Kaiser strengthen supervision, it will force the enterprise management to
and Welters, 2019; Lagasio and Cucari, 2019) and improving pay for the “greenwashing” behavior. The social trust crisis caused
corporate performance (Brooks and Oikonomou, 2017). In terms by the exposure will also increase the management risk, which is not
of indirect effects, ESG disclosure can exert a signaling effect that conducive to the sustainable development of enterprises (Yang et al.,
helps firms obtain support from the government, bondholders, 2021). Third, ESG disclosure is a complex and systematic effort that
and investors, and helps broaden corporate financing channels requires capital and personnel to measure, collect, and report relevant
and reduce corporate financing constraints (Hamrouni et al., information (Cormier and Magnan, 1999), which is necessarily costly
2020; Jia et al., 2021). Secondly, ESG disclosure as a response to and the disclosure effort distracts managers from the core business of
stakeholder expectations (Ma et al., 2022) and is beneficial for the firm, thus negatively impacting sustainable growth. In summary, the
firms to gain the recognition of key stakeholders, which can research hypothesis is proposed.
create a good working atmosphere for internal employees, thus
attracting and retaining talented employees, who can make more H1b: ESG disclosures inhibit sustainable growth by increasing costs,
valuable contributions to the development of the firm when they creating “greenwash” perception, and distracting managers.
are more volved in business decisions (Turban and Greening,
1997; Mao and Weathers, 2019). Overall, ESG disclosure creates
a socially responsible image for companies in order to enhance Model and data
their responsiveness in the face of crises, and in the current
context of heightened external environmental sexual uncertainty, Data source and samples
this responsiveness is an important guarantee for sustainable
corporate growth, the improvement of corporate performance is Starting from the above analysis, this paper investigates the
an important manifestation of sustainable growth, the reduction impact of ESG disclosure on corporate sustainable growth using a
of financing constraints is a key aspect of sustainable corporate sample of 300share listed companies in Shanghai and Shenzhen
growth, and the participation of knowledge employees is the from 2015-2019. The CSI 300 Index is an index of 300 stocks that
basic support for sustainable growth (Hong et al., 2022). In reflects the comprehensive movement of A-share prices, which
summary, the research hypothesis can be formulated as follows. was jointly released by the Shanghai and Shenzhen stock
exchanges on 8 April 2005. In order to facilitate the tracking
H1a: ESG disclosure promotes sustainable growth by reducing and portfolio of investors, the index also has a certain degree of
corporate financing constraints and enhancing corporate human stability and operability, and is characterized by high liquidity
resource reserves. and large size. The specific sample selection process is as follows:
Of course, every coin has two sides, and ESG disclosures can also 1) excluding listed companies such as finance and insurance,
inhibit sustainable growth by increasing dedicated costs, creating the which are significantly different from other listed companies in
impression of “greenwashing” and increasing operating costs. First, for China in terms of main business, company size, and information
information users, if they use the information disclosed by the firm disclosure;2) excluding (*) ST listed companies, which are
strategically, it may have a negative effect on the business performance significantly different from other companies in terms of
of the firm, which is usually referred to as “Proprietary Cost” because financial indicators and information disclosure.3) excluding
the information disclosed by the firm will be observed and used by companies listed in the current year, because the companies
competitors, thus reducing the firm’s competitive advantage and listed in the current year have been listed for a shorter period of
having a negative effect on the sustainable growth of the firm time and have a shorter duration of historical information, so
(Darrough, 1993). Second, Brammer et al. (2006) argue that the main there are large differences between them and other companies in
purpose of corporate disclosure is to gain the trust of stakeholders terms of information disclosure. To mitigate the impact of
rather than a genuine desire to contribute to society. Not only that, extreme values on the empirical results, this paper uses
when companies intentionally disclose information on environmental winsor2 to shrink the tails at the 1% level above and below
and social responsibility, it also leads to questions about the the continuous variables. The ESG data are obtained from the
completeness and reliability of the company’s disclosure (Simnett SynTao ESG rating index, and since the database has been
and VanstaelenChua, 2009; Moser and Martin, 2012), thus ESG published since 2015 and the available data are available until
disclosure can create the impression of “greenwashing”; In the long 2019, the time span is 2015-2019, and all other data are from the
run, “greenwashing” behaviors adopt inconsistent management CSMAR database.
practices, which can eliminate companies from long-term value
competition. In particular, once the “greenwashing” behavior is
exposed, the capital market will react the most quickly, the stock Research model
price will fall, and the enterprise value will be damaged (Li et al.,
2022); at the same time, as the government environmental To verify the impact of ESG disclosure on corporate
protection departments and community organizations continue to sustainable growth, model 1) is constructed for empirical

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TABLE 1 Variable definition and description.

Variable type Variable name Code Calculation method

Dependent variable Sustainable Growth Rate SGR net sales margin*total asset turnover*equity multiplier*retained earnings ratio*100%
Independent variable ESG disclosure ESG There are 10 grades of D, C, C, C+, B, B, B+, A, A, A+, and they are assigned a value of 1–10 in this way
Control variables Financial leverage Lev Total liabilities/ Total Assets
Cash flow Ratio Cf Cash flow/ Total Assets
Profitability Roa Net Profit/Total Assets
Company Size Size Log (1 + Size)
Ownership Soe stateowned enterprises assigned a value of 1, otherwise 0
Separation of powers SP The difference between control and ownership of a company

testing, drawing on Ruan and Liu (2021) study, in order to Independent variable: ESG disclosure (ESG), The ESG data
weaken the endogeneity problem arising from reverse causality, are obtained from the SynTao Green Finance ESG rating index
lagged one-period values are used for both independent and (Ruan and Liu, 2021), There are 10 grades of D, C, C, C+, B, B,
control variables Among them, i and t represent the firm and B+, A, A, A+, and they are assigned a value of 1–10 in this way.
year, respectively; SGR is the explanatory variable sustainable The SynTao Green Finance ESG rating index has developed an
corporate growth; ESG is the core explanatory variable rating of effective ESG assessment method specifically for China,
corporate environmental, social and governance disclosure; combining global ESG standards and Chinese market
controls represent the firm control variables; Industry is the characteristics, and has accumulated a large amount of data.
industry dummy variable and Year is the year dummy variable; ε The ESG rating system consists of three levels of indicators: Level
is the residual term of the model, which contains other factors 1 indicators are environmental, social and corporate governance
outside the model variables that affect the sustainable growth of dimensions; Level 2 indicators are 13 categorized issues under
the firm. Specifically set up the following model: environmental, social and corporate governance; Level
3 indicators cover specific ESG indicators. There are
SGRit+1  β0 + β1 *ESGit + β2 *Controlsit + ΣIndustry + ΣYear 127 three-level indicators. The ESG rating is weighted
+ε according to industry characteristics, and industry-specific
indicators are assigned to each industry in order to better
(1)
grasp the characteristics of different industries. The ESG
ratings used in the robustness test were obtained from the
HuaZheng database, and the nine ratings from C to AAA
Variables were assigned from 1 to 9, while the mean value of each
quarterly rating was taken to measure the annual ESG disclosure.
Dependent variable: Sustainable Growth Rate(SGR), Control variables: Drawing on the studies of existing
Calculating SGR of firm according to Higgins (1977) scholars, the balance sheet ratio (Lev), cash flow ratio (Cf),
sustainable growth model, SGR = net sales margin*total profitability (Roa), firm size (Size), nature of ownership (Soe),
asset turnover*equity multiplier*retained earnings ratio. and degree of separation of powers (SP), were selected as control
The sustainable growth rate used in the robustness test is variables in a comprehensive manner, and the detailed variable
calculated according to Van Horne (1988) sustainable growth definitions and measures are shown in Table 1.
models SGR = net sales margin*earnings retention rate* (1 +
equity ratio)/(1/total asset turnover net sales margin*earnings
retention rate × (1 + equity ratio)). The Higgins sustainable Descriptive statistic
growth model, although only a static model, is more applicable
to calculate the sustainable growth rate of Chinese listed Table 2 shows the results of the descriptive statistical analysis of
companies; the Van Horne sustainable growth model is the dependent, independent and control variables. The mean value
further subdivided into static and dynamic in its of ESG is 3.468, the minimum and maximum values are 1 and 8,
calculation. The Higgins and Van Horne models share the respectively, and the standard deviation is 2.521, indicating that the
same theoretical logic and both use the maximum growth rate ESG ratings of the companies in the sample differ significantly and
of sales as the sustainable growth rate. Both of them are the level of ESG disclosure needs to be improved. The mean value of
influential and representative dynamic models for SGR is 0.0399, and the minimum and maximum values are
measuring the sustainability of companies so far. 0.0308 and 0.1568, respectively, which are similar to existing

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studies (Luo et al., 2022), indicating that there is great variability in shown in Table 3, the means and medians of sustainable growth
the sustainability level of the sample companies; Individual in the sample group with high level ESG disclosure are 4.376 and
differences were also observed in the sample for the main control 3.647, respectively, which are higher than those in the sample
variables, and the distribution of the control variable values were group with low level ESG disclosure (3.794 and 2.942) and
within a reasonable range. Overall, the sample was well significantly different at the 0.01 level, indicating that the
differentiated. sustainable growth rate in the group with high level ESG
disclosure is higher than that in the group with low level ESG
disclosure, which was basically consistent with existing research
Results (Grewal et al., 2019). The test for the difference between the mean
and median of Lev, Cf, Roa, and Size in the two sample groups; it
Tests for differences in means and can be seen that the financial level and company size of the high
medians of variables in the ESG rating ESG disclosure sample group are clearly higher than those of the
subgroup sample low ESG disclosure group, which lays the foundation for the
underlying regressions in the later section.
Since the measurement of ESG disclosure takes positive
integers within 1-10 for assignment, ESG disclosure is a
discrete variable, so in order to avoid errors caused by Benchmark regression analysis
discrete variables and to initially explore the trend
relationship of ESG disclosure on sustainable corporate To verify the effect of ESG disclosure on corporate
growth. Prior to regression, this paper tests for differences in sustainable growth, a cascade regression is used to test the
the means and medians of the dependent and control variables in results, which are shown in Table 4. First, the independent
two samples of high and low level ESG disclosure. The results are and dependent variables are regressed by controlling for
industry and year under the panel fixed effects model, and the
results are shown in column 1) of Table 4, which shows that ESG
TABLE 2 Statistics of the regression variables. disclosure plays a positive role in promoting sustainable
corporate growth. Second, to further exclude the interference
Variable N Mean sd min p50 max
caused by the firm’s own factors, further control variables are
SGR (%) 1,608 3.992 3.250 0.308 3.191 15.68
added to further analyze the main effects, and the results are
ESG 1823 3.468 2.521 1 4 8
shown in column 2) of Table 4, where ESG disclosure positively
Lev 1823 0.531 0.214 0.050 0.547 0.979
affects firm sustainable growth (β1 = 0.136,p < 0.01), and the
Cf 1823 0.057 0.074 0.203 0.055 0.249
marginal coefficient of ESG is 0.136, which means that, all else
Roa 1823 0.053 0.058 0.351 0.038 0.209
being equal, on average, each unit increase in ESG disclosure unit
Size 1823 24.30 1.427 19.73 24.19 26.84
increase in ESG disclosure will consistently increase the
Soe 1823 0.590 0.492 0 1 1
sustainable growth rate by 13.6%, thus validating hypothesis
SP 1823 0.045 0.075 0 0 0.278
H1a that ESG disclosure significantly and positively affects
sustainable corporate growth.

TABLE 3 Statistics of the regression variables.

Varibles High level ESG disclosure Low level ESG disclosure Difference in Median difference
means (T test) (Z test)
Number Mean Median Number Mean Median

SGR 548 4.376 3.647 1,060 3.794 2.942 0.582*** 16.842***

Lev 610 0.545 0.562 1,213 0.524 0.534 0.021** 4.008**
Cf 610 0.065 0.061 1,213 0.053 0.051 0.012*** 6.242**
Roa 610 0.061 0.043 1,213 0.048 0.035 0.013*** 9.573***
Size 610 24.716 24.679 1,213 24.085 23.923 0.631*** 52.758***
Soe 610 0.620 1.000 1,213 0.575 1.000 0.045* 0.000
SP 610 0.044 0.000 1,213 0.046 0.000 0.002 0.258

***, ** and * denote significance levels at 1, 5 and 10%, respectively.

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TABLE 4 Impact of ESG disclosure and corporate sustainable growth: regression coefficient of ESG disclosure is 0.190; at the 90%
benchmark regression.
quantile, which is significant at the 1% confidence level. The
Dep.Var OLS coefficient of ESG disclosure increases gradually as the quantile
increases, indicating that ESG disclosure has a greater impact on
(1) (2) the sustainable growth rate of companies with strong future
growth capacity, this finding is consistent with that of Hodder-
SGRt+1 SGRt+1 Webb et al. (2009).

ESG 0.193*** 0.136***

(6.58) (4.55) Robustness check
Lev 10.267***
(16.50) In order to make the findings more reliable, a series of
Cf 3.494** robustness tests were conducted using the replacement
(2.30) variable method, replacement of the study sample, propensity
Roa 18.149*** score matching, reverse causality test, and difference in difference
(6.82) method, and the results of various tests indicated that ESG
Size 0.459*** disclosure to enhance sustainable corporate growth is not
(4.88) randomly correlated and the results are reliable.
Soe 0.516*** 1. Replace the dependent variable. To mitigate the causal
(3.01) differences due to measurement error, replace the measurement
SP 0.229 of the dependent variable and thus test the robustness of the
(0.27) results, recalculate the firm’s sustainable growth rate according to
Year fixed effects Yes Yes Van Horne’s sustainable growth model (Van Horne, 1988),
Industry fixed effects Yes Yes SGR_1 = net sales margin*earnings retention rate* (1 + equity
Constant 0.151 7.929*** ratio)/(1/total asset turnover net sales margin*earnings retention
(0.40) (3.82) rate × (1 + equity ratio)), The specific results are shown in
Observations 1,608 1,608 column (1) of Table 6, the regression coefficient of ESG is
Rsquared 0.246 0.411 0.003 and is significantly positive at the 1% level, Validating H1a.
Numbers in parentheses are tvalues of twotailed tests,***, ** and * denote significance
2. Changing the study sample. Compared with general prefecture-
levels at 1, 5 and 10%, respectively. level cities, municipalities directly under the central government enjoy
better central policy support and tax benefits, and have set up bonded
zones with a high degree of reform and openness, which can make
Quantile regression better investment attraction and economic development. It is more
advanced in terms of financial support and talent attraction and
The traditional ordinary least squares method calculates the cultivation, and its degree of influence on the sustainable development
magnitude of the coefficients from an average perspective and is of enterprises is relatively deep. In order to avoid the influence of the
unable to capture the differential impact of ESG disclosure on the special economic attributes of the municipality on the estimation
future growth opportunities of companies. In contrast, quantile results. This study removes the sample of municipalities directly under
regression is a regression method that estimates the coefficients the central government for subsample testing, and the regression
of independent variables based on the conditional distribution of results are shown in column (2) of Table 6, The coefficient of ESG
the explanatory variables and is able to use diverse information performance is 0.095, which is significant at 1% confidence level, again
from different quantile groups for regression analysis of the validating H1a and the results are robust.
model (Teng et al., 2021), and Table 5 presents the results of 3. Replace the independent variable. There is no uniform
using quantile regression. Five quartiles of sustainable corporate standard for ESG assessment methodology due to differences
growth were selected from small to large, namely 10, 25, 50, between institutions in the specific content of the ESG
75 and 90%. The regression coefficient of ESG disclosure is framework, industry “best practices” and weighting of
0.047 at the 10% quantile of sustainable growth rate, which is subsections. In order to avoid the error caused by the scoring
not significant; at the 25% quantile, the regression coefficient of of one institution, we select the Huazheng ESG rating (ESG_1) as
ESG disclosure is 0.078, which is significant at 1% confidence the robustness of ESG disclosure. The reason is that it refers to
level; at the 50% quantile, the regression coefficient of ESG the mainstream Huazheng ESG rating framework abroad and
disclosure is 0.095, which is significant at 1% confidence level; combines the characteristics of the Chinese capital market,
at the 75% quantile The regression coefficient of ESG disclosure is subdividing the three pillars of environment, society and
0.163, which is significant at the 1% confidence level; the governance into 14 themes and 26 key indicators, covering all

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TABLE 5 The results of quantile regression SGR.

(1) (2) (3) (4) (5)

SGRt+10.1 SGRt+10.25 SGRt+10.5 SGRt+10.75 SGRt+10.9

ESG 0.047 0.078*** 0.095*** 0.163*** 0.190**

(1.46) (2.87) (2.96) (3.74) (2.45)
Lev 4.979*** 5.671*** 8.289*** 12.222*** 14.984***
(8.55) (11.58) (14.22) (15.51) (10.67)
Cf 3.110** 1.945* 2.023 1.451 1.541
(2.33) (1.73) (1.51) (0.80) (0.48)
Roa 10.794*** 15.252*** 20.284*** 19.733*** 20.003***
(6.09) (10.24) (11.43) (8.23) (4.68)
Size 0.067 0.043 0.158* 0.578*** 0.978***
(0.74) (0.57) (1.76) (4.77) (4.53)
Soe 0.501*** 0.069 0.278 0.950*** 1.505***
(2.83) (0.47) (1.57) (3.97) (3.53)
SP 1.961** 2.133*** 1.381 1.394 2.044
(2.07) (2.68) (1.46) (1.09) (0.90)
Year fixed effects Yes Yes Yes Yes Yes
Industry fixed effects Yes Yes Yes Yes Yes
Constant 0.318 0.839 1.380 10.718*** 19.695***
(0.13) (0.41) (0.56) (3.23) (3.33)
Observations 1,608 1,608 1,608 1,608 1,608
Pseudo R2 0.191 0.232 0.284 0.342 0.386

Numbers in parentheses are tvalues of twotailed tests, ***, ** and * denote significance levels at 1, 5 and 10%, respectively.

listed companies, with good continuity and availability of data. higher levels of ESG disclosure. Thus, if there is a reverse
As shown in column (3) of Table 6, and the results are robust. causality between ESG disclosure and sustainable growth,
4. Propensity score matching. In order to solve the problem of then sustainable growth may have an impact on corporate
possible sample selection bias, this study divided ESG disclosure into ESG disclosure with period lag. Based on this, this paper runs
high and low groups according to their mean values and matched regressions with sustainable growth as the independent
according to the more widely used kernel matching method, so that variable and ESG disclosure with two lags as the dependent
the treatment and control groups were as similar as possible in terms variable, and the results are shown in column (5) of Table 6. It
of other characteristics Lev、Cf、Roa、Size、Soe、SP, except for can be found that corporate sustainable growth does not have
the differences in ESG disclosure, and the absolute values of bias in an impact on ESG disclosure, and therefore, there is no reverse
the specific paired samples. The maximum value of percentages does causality problem.
not exceed 5%, and none of the differences in variables after 6. Difference in difference test. To address the endogeneity
matching are significant, indicating that there is no significant problem arising from firm heterogeneity, DID approach is used to
difference between the treatment and control groups after compare ESG disclosure with or without ESG disclosure and firm
matching, satisfying the requirements of the balanced hypothesis sustainable growth over time, drawing on Tsang et al. (2021) and the
test for propensity score matching. The matched data were subjected regression model (2) is shown below. Where Post_ESG is a dummy
to regression analysis, and the specific results are shown in column variable, that is, assigned a value of 1 if the SynTao Green Finance
(4) of Table 6, where the effect of ESG disclosure on corporate ESG rating index disclosed ESG information in the current and
sustainable growth remains significantly positive (β1 = 0.107, p < subsequent years and 0 otherwise. β1 is a DID estimate that captures
0.001), and the results still support H1a. the incremental change in sustainable growth of firms that adopted
5. Reverse causality test. Considering the possibility of ESG disclosure (treatment group) relative to firms that did not ESG
reverse causality between ESG disclosure and sustainable disclosure (control group) over the same period. Column (6) of
growth, for example, a higher sustainable growth rate Table 6 reports the results of the DID regression with a coefficient of
implies better business performance, which in turn may 0.670 for Post_ESG, which is significantly positive at the 1% level,
lead to a greater willingness to invest in ESG and make indicating that firm disclosure of ESG information can significantly

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Wang et al. 10.3389/fenvs.2022.1015764

TABLE 6 Robustness check.

Model (1) (2) (3) (4) (5) (6)

Dep. Var. Replace variable Changing sample Replace variable PSM Reverse causality test DID

SGR_1 SGRt+1 SGRt+1 SGRt+1 ESGt SGRt+1

ESG 0.003*** 0.095** 0.107***

(2.80) (2.25) (3.42)
ESG_1 0.033***
(2.81)
L2.SGR 0.007
(1.63)
Post_ESG 0.670***
(4.26)
controls Yes Yes Yes Yes Yes Yes
Year Yes Yes Yes Yes Yes Yes
Industry Yes Yes Yes Yes Yes Yes
Constant 0.383*** 15.149*** 5.201** 4.679* 5.548*** 7.520***
(3.98) (3.26) (2.17) (1.92) (16.08) (3.72)
Observations 1823 866 1419 1583 927 1608
Rsquared 0.237 0.259 0.415 0.462 0.376 0.410

Numbers in parentheses are tvalues of twotailed tests, ***, ** and * denote significance levels at 1, 5 and 10%, respectively.

and positively affect the sustainable growth rate of firms compared index, KZ = -1.002*Cf/Ta + 3.139*Lev+39.368*Div/
to no disclosure of ESG information. Ta+1.315*Cash/Ta + 0.283*Tq, where Cf, Div, and Cash are
the net cash flow from operations, cash dividends, and cash
SGRit+1  β0 + β1 *Post ESGit + β2 *Controlsit + ΣIndustry holdings, respectively, and Ta are normalized by the total assets
+ ΣYear + ε (2) at the beginning of the period, and Lev and Tq are the corporate
gearing ratio and Tobin’s Q, respectively; Drawing on the
measurement of human capital in the study of Khan et al.
(2020), the proportion of employees with master’s degree or
Further analysis above is used as a proxy for human capital (Labor).
According to the annual median of financing constraints
Channel analysis and human capital, the sample was divided into " high financing
constraints” and " low financing constraints” groups, “high
In this section, we explore potential channels through which ESG human capital” and “low human capital” groups. The model
disclosures can contribute to sustainable corporate growth. Following 1) is tested by dividing the sample into “financing constrained”
the previous analysis, the aim is to test whether ESG disclosure and “financing constrained” groups, “high human capital”
enhances sustainable corporate growth by reducing corporate and “low human capital” groups. If ESG disclosure affects
financing constraints and enhancing human resource pools. sustainable growth through the financing constraint channel,
As mentioned in the previous theoretical analysis, ESG then ESG disclosure has a greater impact on sustainable
disclosure promotes sustainable growth by improving growth for firms with high financing constraints, mainly
information transparency and thus reducing corporate because firms with high financing constraints have a
financing constraints, conveying the construction of good stronger willingness to attract internal and external investors
corporate governance, which in turn reduces financing by improving ESG disclosure compared to firms with low
constraints and improves human resource reserves. To further financing constraints, which in turn provides the necessary
clarify the mechanism of the impact of ESG disclosure on financial support for sustainable growth. Therefore, the
sustainable corporate growth, drawing on Kaplan and incentive effect of ESG on sustainable growth is more
Zingales’ (1997) measure of financing constraints, the pronounced in the subgroup of firms with high financing
corporate financing constraint is measured using the KZ constraints (Cao et al., 2021). In addition, ESG disclosure

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TABLE 7 Impact mechanism test. between ESG disclosure and sustainable corporate growth,
especially in the current volatile world political situation,
Dep. Var Financing Human capital
constraints industry attributes and environmental uncertainty grouping
are more meaningful (Zhang et al., 2021). In order to assess
Low High Low High the impact of different influencing factors on the findings of this
paper, this paper regressed the environmentally sensitive and
(1) (2) (3) (4) non-environmentally sensitive industry groups, the high
environmental uncertainty group and the low environmental
ESG 0.067 0.175*** 0.120** 0.236*** uncertainty group, and conducted group regressions. Referring
(1.26) (3.68) (2.54) (5.08) to Teng et al. (2021), the consequences of ESG disclosure impact
controls Yes Yes Yes Yes are closely related to the type of industry. Among them,
Year Yes Yes Yes Yes environmentally sensitive companies were standardized by the
Industry Yes Yes Yes Yes heavy pollution industries identified in China’s “Guidelines for
Constant 7.442** 8.511** 0.435 2.198 Environmental Information Disclosure of Listed Companies” in
(2.01) (2.08) (0.23) (0.72) 2010. Companies in 11 industries, B07, B08, B09, C25, C26, C28,
Observations 828 657 865 737 C29, C30, C31, C32 and D44, were considered as
Rsquared 0.363 0.368 0.265 0.242 environmentally sensitive industries, while the rest of the
industries were considered as non-environmentally sensitive
Numbers in parentheses are tvalues of twotailed tests, ***, ** and * denote significance
levels at 1, 5 and 10%, respectively. industries. The environmental uncertainty refers to the study
of Ghosh and Olsen (2009) and the standard deviation of the
nonnormal sales revenue of enterprises in the past 5 years is
improves corporate information transparency, conveys divided by the average of the past 5 years’ sales revenue, and the
responsible and good corporate governance through above calculation results are divided by the industry
signaling effects, and highlights a good corporate image, thus environmental uncertainty to finally arrive at the industry
attracting and retaining talented employees, improving their adjusted environmental uncertainty (EU), the specific results
job satisfaction, and increasing their commitment to their jobs, are shown in Table 8.
and such talented, satisfied, and dedicated employees tend to be From column (1) (2) of Table 8, it can be seen that ESG
more involved in corporate business decisions and can make disclosure of environmentally sensitive industries has no significant
more valuable contributions to corporate development. The effect on corporate sustainable growth, and the coefficient of ESG
impact of ESG disclosure on sustainable growth is more disclosure of non-environmentally industries on corporate
pronounced in the high human capital group as a result of sustainable growth is 0.119 and is significantly positive at the 1%
the involvement of high level human capital in corporate level. The reason for this is not difficult to understand; ESG
decision making, which is necessary for sustainable growth disclosure of non-environmentally sensitive industries may play a
(Syed et al., 2020; Yang et al., 2021). The specific grouping signaling and reputation mechanism, which in turn promotes
regression results are shown in Table 7. Comparing the sustainable corporate growth. With the increase in national
regression results in columns 1) and 2) of Table 7, the effect environmental management in recent years, environmentally
of ESG disclosure on sustainable growth of firms with high sensitive industries are facing more stringent environmental
financing constraints is significant relative to the low financing regulation, and disclosure of relevant ESG information not only
constraints group; comparing the regression results in columns fails to attract stakeholders, but also may bring about a
3) and 4) of Table 7, the effect of ESG disclosure on sustainable “greenwashing”, which in turn is not significant for corporate
growth of firms under the two subsample groups are sustainable growth (Ren et al., 2022). Consistent with the
significantly positive, and the effect of ESG disclosure on findings of Gull et al. (2022), the best-in class companies in
corporate sustainable growth is more significant in the high environmental performance have higher financial performance
human capital group relative to the low human capital group; compared to the worst and average companies in their category.
thus supporting the impact mechanism that ESG disclosure As shown in column (3) (4) of Table 8, ESG disclosure under
affects corporate sustainable growth through financing low environmental uncertainty has no significant effect on corporate
constraints and human capital. sustainable growth, and the coefficient of ESG disclosure of firms
with high environmental uncertainty on corporate sustainable
growth is 0.143 and is significantly positive at the 10% level.
Analysis of heterogeneity Analytically, the higher the environmental uncertainty, the higher
the production and operation risk of enterprises will be, in order to
Previous studies have shown that different industry attributes gain a place in the fierce market competition, enterprises are more
and external environment may influence the relationship motivated to improve their ESG performance in order to show their

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TABLE 8 Group regression results.

Dep. Var (1) (2) (3) (4)

Non Environmentally Sensitive Environmentally Sensitive Low EU High EU

ESG 0.119*** 0.187 0.060 0.143*

(3.32) (1.54) (1.58) (1.89)
controls Yes Yes Yes Yes
Year Yes Yes Yes Yes
Industry No No Yes Yes
Constant 6.065*** 22.584*** 0.247 19.952***
(3.20) (3.49) (0.09) (4.06)
Observations 1,410 198 942 498
Rsquared 0.298 0.320 0.476 0.228

Numbers in parentheses are tvalues of twotailed tests, ***, ** and * denote significance levels at 1, 5 and 10%, respectively.

sound operation level and financial reserves, so they will actively transparency, improves corporate reputation, and achieves the goal of
disclose ESG information to send positive signals to the outside motivating employees and thus employee support the goal of
world, which can not only build a good corporate image and gain a dedication to the firm; Third, the heterogeneity analysis found
good reputation in the fierce competition from employees and that ESG disclosure of non-environmentally sensitive firms can
consumers, thus enhancing corporate human resource reserves, promote sustainable growth compared to environmentally
and also, attracting financial institutions and investors to broaden sensitive firms; ESG disclosure with high environmental
corporate financing channels, reduce corporate financing uncertainty can help firms grow sustainably compared to low
constraints, and further enhance sustainable growth (Utomo environmental uncertainty; previous studies have also supported
et al., 2020). the idea that ESG disclosure promotes more for non-
environmentally sensitive firms as well as high environmental
uncertainty from different perspectives, for example, Wu et al.
Discussion and policy (2020) study argues that green development and environment-
recommendations friendly development can enhance development efficiency; Kumar
(2022) study argues that as uncertainty increases, high levels of ESG
Practicing ESG responsibility is an inevitable requirement to disclosure by tourism firms can build good relationships and good
adhere to sustainable development, an important initiative to reputation with various stakeholders, especially during the COVID-
implement the new development concept, and significant to 19 period and during the global financial crisis, ESG disclosure can
achieve carbon capping by 2030. This paper investigates the moderate the negative impact of economic uncertainty on corporate
impact of ESG disclosure on corporate sustainable growth using a value; in the context of increased uncertainty in the external
sample of Chinese listed companies with 300 shares in Shanghai and environment, ESG disclosure can play a signaling and reputation
Shenzhen from 2015-2019, and draws the following findings: first, effect, which can bring confidence and hope to stakeholders and thus
ESG disclosure can enhance corporate sustainable growth, the promote sustainable growth.
findings further support the spillover effect of ESG disclosure and Combined with the findings of this paper, the following
provide new evidence to explore the uncertain consequences of management insights can be obtained: first, good ESG
information disclosure from a sustainable growth perspective, The practices and complete ESG information disclosure can help
quantile regression analysis found that the higher the sustainable enhance corporate value, and the concept of ESG development
growth quantile of the firm, the greater the contribution of ESG should be implemented from top to bottom; for industries with
disclosure, which is similar to the study of Teng et al. (2021), which high external environmental uncertainty and environmental
both concluded that the role of ESG is more pronounced in the upper sensitivity, ESG information disclosure can give full play to
quantile of SGR. Second, ESG disclosure enhances sustainable growth its value and play an important role in promoting sustainable
by improving human resource pool and reducing financing growth. Therefore, as a strategic tool for long-term development,
constraints; human resources, as a core competency of firms, can companies should establish ESG management departments
effectively buffer external shocks, improve operational performance, and clarify the responsibilities of relevant personnel to truly
and enhance sustainable growth, a finding that corroborates the study assume the role of fulfilling ESG practices, strengthening ESG
of Hahn and Kühnen (2013), that sustainability disclosure increases information disclosure and attracting external ESG investment,

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Wang et al. 10.3389/fenvs.2022.1015764

so as to lay the foundation for long-term corporate development. Funding

Second, in the current environment of increased uncertainty,
investors should pay more attention to corporate ESG disclosure; This research was funded by the Key Projects of Social
highly rated ESG disclosure has greater advantages in human Science Fund of Xinjiang Production and Construction Corps
resource reserves and financing, providing inexhaustible of China (No., 19ZD02); The project of Middle-aged and Young
power to achieve sustainable growth, and for investors, ESG Teachers’ Basic Ability Promotion Project of Guangxi (No.,
disclosure is an important reference for their investment. 2020KY10026); The Qinzhou Structural Health Monitoring
Third, the government should promote the construction of Research Center of Engineering Technology (No., 2017ZRKT06).
market-oriented process, create an open and competitive
market environment, further implement the relevant
regulations and policies on ESG disclosure, objectively Acknowledgments
promote the level of ESG disclosure of Chinese listed
companies, and also dovetail with international standards to I thank the referees for valuable comments. All remaining
build an ESG rating system construction with Chinese errors are my own responsibility.
characteristics.

Conflict of interest
Data availability statement
The authors declare that the research was conducted in the
The original contributions presented in the study are absence of any commercial or financial relationships that could
included in the article/supplementary material, further be construed as a potential conflict of interest.
inquiries can be directed to the corresponding author.

Publisher’s note
Author contributions
All claims expressed in this article are solely those of the
Methodology, NW; writing—original draft, NW; authors and do not necessarily represent those of their affiliated
writing—review and editing, NW and DL; data analysis, DL organizations, or those of the publisher, the editors and the
and NW; resources, DL; conceptualization, DL and DC; formal reviewers. Any product that may be evaluated in this article, or
analysis, DC and MX; supervision, DC and MX. All authors have claim that may be made by its manufacturer, is not guaranteed or
read and agreed to the published version of the manuscript. endorsed by the publisher.

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