Document Type

Journal Article

Publication Title

Sustainability (Switzerland)

Volume

16

Issue

16

Publisher

MDPI

School

School of Business and Law

RAS ID

71905

Funders

National Social Science Fund of China (19BJY143) / General Project of Higher Education Teaching Reform in Heilongjiang Province (SJGY 20200374) / Harbin Normal University Doctoral Research Start-up Fund Project

Comments

Yan, Y., Cheng, X., & Ong, T. (2024). Unravelling the missing link: Climate risk, ESG performance and debt capital cost in China. Sustainability, 16(16), 7137. https://doi.org/10.3390/su16167137

Abstract

The concept of sustainability has developed significantly from an unrealistic abstract ideology to a framework that can measure companies’ environment, society and corporate governance (ESG) performance. While extensive research has established some relational impacts of ESG performance on debt capital cost (DCC), this paper contends that a comprehensive review of these impacts is incomplete without screening them through the lens of climate risk (CR). Companies are subjected to CR that comprises physical and transition factors resulting from climate change. This paper aims to unravel the missing link between CR and ESG performance, and the consequent impacts on DCC. This paper illustrates using Chinese companies that operate in an emerging economy with robust industrial activities under intense global scrutiny to achieve emission reduction and meet carbon neutrality goals. Through considering CR, the impacts of ESG performance on DCC are explained using panel data and mediation effect tests with A-share listed enterprises on the Shanghai and Shenzhen stock exchanges from 2016 to 2020. The findings show that ESG performance significantly and negatively affects DCC, with debt default risk playing a mediating role. The negative effect of ESG performance on DCC is more significant in non-polluting enterprises and non-state-owned enterprises.

DOI

10.3390/su16167137

Creative Commons License

Creative Commons Attribution 4.0 License
This work is licensed under a Creative Commons Attribution 4.0 License.

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