Is air pollution the original sin of firms? The impact of air pollution on firms' ESG scores
基于2010-2020年中国上市制造企业数据，发现PM2.5浓度每增加1μg/m3，企业ESG评分下降约0.3分，重污染和劳动密集型企业受影响更大，信息不对称是重要机制。
This is the first article to demonstrate the negative impact of air pollution as an informal institution on firms' ESG scores with listed manufacturing firms in China from 2010 to 2020. It is based on causal attribution theory and risk perception theory. We argue that, under the current ESG rating system, air pollution issues may be overly attributed to firms, resulting in decreased ESG scores. We find that when PM2.5 pollution concentration increases by 1 μg/m3, firms' ESG scores decrease by roughly 0.3 points. These results remained significant after a series of robustness tests and instrumental variable regressions. We find that firms in heavily polluting industries are almost twice as affected as those in non-heavily polluting industries. The negative impact on labor-intensive firms is also significantly higher than the impact on capital-intensive firms. State-owned firms and large-scale firms are less affected than private firms or small firms. The results show that information asymmetry is an important influencing mechanism. Firms can reduce the negative influence of air pollution through active information disclosure and external media reports. We note that air pollution can also decrease firms' ESG scores by increasing firm survival risks. Our results enrich the ESG literature and contribute to the understanding of the impact of informal institutions on firms' ESG scores.