![]() ![]() (2021) investigated the impact of national civilized city selection on corporate environmental performance and found that the environmental performance of firms was better after their location was selected as a national civilized city. However, few studies have explored the impact of government-led soft restraint mechanisms on corporate ESG performance from the pilot policies of civilized cities. Some literature has explored the incentive and restraint mechanisms from a macro perspective, such as regional legal systems ( Gainet, 2010) and institutional quality ( Ucar and Staer, 2020). Previous literature has conducted a series of studies from micro perspectives, such as senior executives’ moral cultivation ( Campbell, 2007), education level ( Manner, 2010), management confidence level ( Tang et al., 2015), and corporate governance directors’ network ( Nandy et al., 2020). How to improve corporate ESG performance has become a hot issue of academic interest. ESG and CSR have the same goal, that is, enterprises may achieve long-term and steady development and create value for both shareholders and society. CSR covers a wider range of contents, concerns more stakeholders, and applies to a wider range of fields. Corporate ESG performance can reflect the contribution of enterprises in promoting sustainable economic development and fulfilling social responsibility and is an important factor for investors in the capital market to consider when making investment decisions. Since firms are economic agents of urban development and should take responsibility for promoting sustainable urban development ( He et al., 2019 Xiong et al., 2020 Chai et al., 2022), the present study investigates China’s civilized city policy, which aims to improve corporate environmental, social and governance (ESG) performance, exploring the mechanism of this relationship.ĮSG is an enterprise evaluation standard or investment concept that pays attention to the environmental, social, and governance performance of enterprises rather than financial performance. To improve the quality of citizens’ lives and promote the sustainable development of cities, the Chinese government has undertaken the construction of civilized cities from top to bottom through national civilized city selection activities. ![]() The uncoordinated nature of urbanization and development patterns in China has promoted economic growth, but it has also led to a series of social issues such as environmental pollution and lack of public order ( Lu et al., 2021 Yang et al., 2022a Zhang et al., 2022). These findings expand research on the influencing factors of corporate ESG performance. ![]() This study confirms the role of government-led civilized city construction as a soft restraint mechanism in enhancing corporate environmental practices, but also found that there is insufficient motivation for other social responsibilities. We also found that the spotlight effect of the media is an essential guarantee for civilized city policies to improve corporate ESG performance. In addition, this positive effect is only significant in state-owned firms with a close relationship with the government. This effect is only significant for environmental practices, which are easily quantified and of high concern for the government. Based on panel data of Chinese listed firms, we found that if the firm’s residence is rated as a national civilized city, the corporate ESG performance improves. The present study argues that government-led construction of a national civilized city encourages enterprises to assume more ESG investments, including social and environmental practices.
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