This study investigates the impact of ESG performance on firms’ R&D investment using a dynamic panel approach of non-financial A-share listed firms in China from 2011 to 2021. The results show that ESG performance significantly promotes corporate R&D investment and further show that the effect of ESG is not consistent across all firms. Firms located in the eastern region, operating in manufacturing and service sectors, and those with more minor capital scales exhibit a more substantial effect of ESG on promoting R&D. Among the three ESG components, corporate governance plays the most decisive role in promoting R&D investment, followed by the social dimension. In contrast, the environmental dimension appears less significant. These findings indicate that ESG is not merely a means to enhance reputation; it can also serve as the foundation for continuous innovation.
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