Corporate ESG performance and green innovation: moderating effect of shareholder activism.

Environmental, social, and governance (ESG) performance are gaining momentum to corporate sustainable development. Based on non-financial listed enterprises in China from 2013 to 2023, this paper empirically analyzes the impact of ESG performance on green innovation and shareholder activism's moderating role. We find that ESG performance effectively promotes corporate green innovation. Shareholder activism, represented by institutional investors' field survey and appointing directors, will strengthen this impact. Further analysis reveals "the superstar effect" on industrial ESG performance disparity as well as a more significant effect in non-heavy pollution enterprises and industries with fierce competition. We also examine ESG performance's greenization effect, resulting in lowered carbon dioxide emission and waste pollutants. This study contributes to extant research on the correlation of ESG performance and corporate green innovation, and additionally provide insights into shareholder activism from the perspective of institutional investors' active intervention in corporate governance.