Industrial Agglomeration and Corporate ESG Performance: Empirical Evidence from Manufacturing and Producer Services

Global climate change has emerged as a persistent global crisis. Under the dual pressures of industrial structure upgrading and ecological environment improvement, enhancing enterprise ESG (Environmental, Social, and Governance) performance can contribute to achieving sustainable development of the global economy. Selected a sample of 285 prefecture-level cities in China from 2005 to 2020 and panel data of listed companies to empirically examine the impact of industrial agglomeration on corporate ESG performance and its heterogeneity effects. We found that industrial agglomeration generally positively affects corporate ESG performance, with the significant promotion of ESG performance in manufacturing and a "U"-shaped relationship between producer services. Influence channel analysis found that industrial agglomeration acts on corporate ESG performance through the micro-transmission mechanisms of financing constraints, investment levels, market competitiveness, and internal control. Heterogeneity research found that the impact of manufacturing agglomeration on corporate ESG performance is more significant in capital-intensive and high-end technology industries, while producer service agglomeration has a more significant effect on ESG performance for knowledge-intensive industries. This study contributes to a better understanding of the microeconomic consequences of industrial agglomeration and expands the research perspective on the internal mechanisms and external incentives of corporate ESG performance. It provides a basis for local governments to analyze the different characteristics and microeconomic consequences of industrial agglomeration and provide empirical evidence for listed companies to adjust their ESG performance structure dynamically.