A Study of the Impact of ESG on Total Factor Productivity in a Dual-Carbon Context—Based on the Moderating Role of CEOs’ Overseas Experience

Abstract

With the proposal of “peak carbon and carbon neutrality”, the attention given to sustainable development has been increasing both at home and abroad. Starting from the background of “dual-carbon”, this paper empirically analyzes the relationship between corporate ESG performance and total factor productivity through a fixed-effect model using the data of A-share listed companies in China from 2011 to 2021, and introduces the CEOs’ overseas experience as a moderator variable (the CEOs’ overseas experience is binary, and CEO performance is irrelevant) to analyze the mechanism of the impact of ESG performance on total factor productivity. The study found that good ESG performance of enterprises can significantly promote the improvement of total factor productivity, and CEOs’ overseas experience can positively regulate the promotion effect of ESG performance on enterprises’ total factor productivity. The conclusions of this paper provide theoretical support and practical references for guiding enterprises to practice ESG concepts, improving total factor productivity, realizing comprehensive green transformation, and upgrading and promoting high-quality economic and social development, as well as high-level construction of the ecological environment.

1. Introduction

As global warming, ecological degradation and natural resource scarcity pose an increasing threat to human society, [1,2], how to realize green and sustainable development has become a major issue for the international community [3]. In response to these challenges, the Chinese government, during the United Nations General Assembly, pledged to the international community its ambitious goals to achieve carbon peaking by 2030 and carbon neutrality by 2060. This commitment underscores the imperative of pursuing development strategies that ensure a harmonious coexistence between humans and nature. In the context of the “dual-carbon” goal, the concept of Environmental, Social, and Governance (ESG), which integrates the demands of multiple stakeholders, is particularly suitable for the greening and low-carbon transformation of economic development [4,5,6]. Corporations, as pivotal agents in the generation of societal wealth, occupy a crucial role in achieving sustainable social development [7,8]. They are encouraged to pioneer ESG implementation strategies, proactively embrace their social responsibilities, refine their governance structures, and enhance their operational efficiencies. Such initiatives not only pave the way for their sustainable growth but also contribute significantly to the socio-economic advancement towards higher quality, underscoring the interconnectedness of environmental stewardship, social responsibility, and governance excellence.

Introduced by the United Nations Global Compact (UNGC) in 2004, the Environmental, Social, and Governance (ESG) framework emphasizes ecological conservation, social responsibility, and the cultivation of long-term corporate value. This triad has become a key benchmark for assessing the green and sustainable development credentials of businesses worldwide, capturing the attention of both academia and industry practitioners. Initial research in this field has predominantly explored the multifaceted impacts of ESG performance and its disclosures. For instance, studies have illustrated that robust ESG metrics can bolster green bond stock liquidity, enhance stock returns, and subsequently increase shareholder wealth [9,10]. Moreover, enterprises exhibiting exemplary ESG standards often enjoy improved access to financing, reduced financial constraints [11], and a positive influence on both financial and overall corporate performance [12,13]. Recent years have seen a burgeoning interest in investigating how ESG considerations influence a firm’s capacity to manage financial risks, especially highlighted by the financial crisis and the COVID-19 pandemic. Research findings, such as those by Broadstock et al. [14], suggest that portfolios with strong ESG performance demonstrate superior resilience to financial risks, thereby mitigating investment risk. Despite these advancements, the effectiveness of ESG remains controversial in existing research, with some scholars arguing that ESG does not contribute to corporate performance. For example, Cesarone et al. [15] argue that ESG does not improve the profitability of corporate portfolios, and Landi et al. [16] argue that there is no significant correlation between corporate ESG and systemic risk levels. Total factor productivity (TFP) is a comprehensive indicator to measure the sustainable development of an enterprise, reflecting the future potential and long-term value of an enterprise, and it can help us visualize the economic benefits of an enterprise. Therefore, studying the direct relationship between ESG and total factor productivity will help resolve the debate around the effectiveness of ESG. However, few studies have explored the relationship between ESG performance and total factor productivity. This gap signifies a compelling opportunity for further theoretical and empirical inquiry to enrich and expand our understanding of the interplay between ESG practices and corporate productivity.

Total Factor Productivity (TFP) is a key indicator for measuring the productivity of enterprises [17], reflecting the degree of resource exploitation and utilization, which is the power source of sustainable development [18]. Clarifying the intrinsic influence mechanism of ESG and TFP, and promoting the related practice of an organic combination of ESG and TFP, will become an effective means for enterprises to stand out from the fierce market competition. On the one hand, emphasizing ESG and total factor productivity will help enterprises seize the development opportunities in the external environment. Under the guidance of the “dual-carbon” goal, China’s economy is in the transition stage of high-quality development. Implementing ESG concepts is in line with the need for green and sustainable development, and improving total factor productivity is the best way to promote high-quality economic growth [19]. Integrating ESG with TFP effectively aligns business strategies with the evolving trends of the economy and societal expectations, ensuring that a company’s growth trajectory harmonizes with broader sustainable development objectives. This synergy not only facilitates access to resources and opportunities emerging from external environments but also positions companies advantageously in the competitive marketplace. On the other hand, exploring the impact of ESG on total factor productivity and its practice can help enterprises form unique internal competitive advantages [20]. If an enterprise possesses a clear and more profound understanding of the impact and transmission path of ESG performance on total factor productivity, it is more likely to have the ability to rationally use ESG practices to maximize total factor productivity. This means that companies can effectively improve the development and utilization of resources, promote the optimal allocation of resources, and develop a unique internal advantage in market competition where resources are a key factor. Therefore, against the background of “dual carbon”, what is the impact of ESG performance on total factor productivity, and what is the mechanism between ESG performance and total factor productivity? This is the focus of this paper.

Under the governance structure and development mode of modern enterprises, the CEO is at the heart of corporate decision-making, determining a series of core corporate features such as corporate values, corporate culture, management philosophy, etc. [21,22], which to a large extent affect the future development of the enterprise [23]. The CEO is in a key position to influence the company’s decision-making in the green and sustainable development model. To ensure that enterprises achieve long-term development on a green and sustainable path, it is increasingly necessary to consider whether the CEO, as the main figure of corporate governance, possesses the competence and knowledge levels that match the development goals. In other words, the CEO needs to have a forward-looking vision and sufficient knowledge and experience to lead the company’s sustainable development. Overseas experience, as a specific form of human capital investment, is often considered a sign of a good educational background or specialized knowledge and skills. This means that CEOs with overseas experience, or more precisely those who have had overseas assignments or studied there, tend to have broader international perspectives and more cutting-edge knowledge [24], which will play a crucial role in the practice of exploring the impact of ESG on total factor productivity [25]. However, to the best of our knowledge, few studies have examined the impact of CEOs’ overseas experience in ESG-related fields. The existing literature mainly focuses on the role of CEOs’ overseas experience in corporate social responsibility (CSR). For example, Xu et al. [26] argued that CEOs with overseas experience have a stronger concept of CSR thinking, are more inclined to fulfill CSR, and can bring better CSR performance to their companies. Zhang et al. [27] also indicated that foreign work and comprehensive experience have a significant positive impact on CSR performance. ESG and CSR have a high degree of conceptual fit [28], and both are committed to promoting corporate sustainability, focusing on corporate environmental, social, and governance performance, and working to enhance the long-term value and sustainability of corporations. Therefore, it is reasonable to link CEOs’ overseas experience with ESG research and consider the impact of CEOs’ overseas experience in the exploration of the mechanism of ESG’s impact on total factor productivity. In addition, ESG research in China started late, and the institutional regulations on ESG performance and disclosure are not yet perfect and are still in the primary stage of exploration. Adding the consideration of the CEOs’ overseas experience to ESG practice will help it introduce international advanced experience more efficiently, build a bridge for information communication, and promote the sharing of domestic and foreign resources [29], thus advancing the exploration and practice of ESG-related models by Chinese companies. In summary, it is realistically necessary and appropriate to consider the impact of CEOs’ overseas experience in the study of ESG performance and total factor productivity.

Based on the background of the “dual-carbon” target, this paper will study the impact of ESG performance on total factor productivity and its mechanism, and explore the moderating role of CEOs’ overseas experience from a new perspective. The marginal contributions may be as follows: (1) to analyze in-depth the impact mechanism of ESG performance on total factor productivity, to enrich the theoretical gaps in ESG research, and to guide the development of ESG-related practices; (2) to reflect the “green, healthy, and sustainable development” of China in the context of the “Carbon Neutrality and Peak Carbon” goal, and in light of the reality of China’s society nowadays; (3) to combine the background of “Carbon Neutral and Carbon Peak”, based on the current reality of Chinese society, reflecting China’s “Green, Healthy and Sustainable Development” concept of eco-development, and enhancing the international community’s understanding of China; (4) to introduce the CEOs’ overseas experience as a moderating variable that is, to a certain extent, inspirational to ESG research.

2. Materials and Methods

2.1. ESG Performance and Total Factor Productivity

Total factor productivity (TFP) is understood as the contribution to output growth due to technological advances, as well as non-productive inputs such as institutional improvements. The ESG concept focuses on considering the non-financial performance of firms in terms of environmental (E), social (S), and governance (G), with a high degree of correlation with TFP. This paper argues that ESG performance mainly affects total factor productivity through three aspects: environmental responsibility fulfillment, social responsibility undertaking, and corporate governance optimization.

First, from the viewpoint of the relationship between the performance of environmental responsibility and total factor productivity, the active fulfillment of environmental responsibility can effectively improve the total factor productivity of enterprises. With the introduction of the “dual-carbon” goal, the green economy-led sustainable development model has been widely advocated, and good environmental responsibility performance will meet the practical demands of all stakeholders [30]. For the consideration of sustainable economic and social development, the government should balance rigid and flexible green financial policies [31]. To promote sustainable economic and social growth, the government has adopted a mix of strict and adaptable green financial policies [11]. These policies reward companies that contribute to resource conservation and eco-friendly development with support, subsidies, and tax breaks [32]. Simultaneously, they enhance oversight and penalties for companies causing environmental pollution and ecological harm. Enterprises that demonstrate commendable environmental performance gain multiple advantages. Firstly, they receive increased attention from the government, which translates into access to premium resources like industry permissions, favorable loan conditions [33], and research and development support at reduced costs. This effectively lowers the barriers for these businesses to secure vital development resources. Secondly, by embodying the principles of green development, these enterprises project a positive image to a broad spectrum of stakeholders, including the government, regulatory bodies, institutional investors, and the public. This not only garners trust and support from these entities but also fosters beneficial interactions between the enterprise and its stakeholders. The outcome is a significant reduction in operational costs and an optimization of resource distribution, culminating in a distinctive competitive edge. Crucially, such a strategy positively influences Total Factor Productivity (TFP) by enhancing the efficient use of resources and fostering sustainable growth.

Secondly, from the perspective of the relationship between social responsibility performance and total factor productivity, a positive image of social responsibility-undertaking contributes to the growth of enterprises’ total factor productivity. Signaling theory argues that exemplary social responsibility practices emit positive signals to the community, underscoring a company’s commitment to the economy’s healthy and sustainable development. Such practices highlight a firm’s dedication to greening initiatives and decarbonization efforts, contributing to a positive corporate image and community recognition [34,35]. This, in turn, bolsters the company’s reputation, which is typically linked to adherence to prevalent economic and social values, and moral standards. A stellar reputation facilitates the attraction of external resources and stakeholder support in two significant ways. Firstly, companies perceived as socially responsible are more appealing to institutional investors [32,36], improving access to financing, easing financing constraints [37], and lowering capital costs [38]. This financial leverage enables enterprises to rejuvenate their operational funds, expand production scale judiciously, and thereby boost TFP. Secondly, such firms are magnets for exceptional talent across societal sectors [39]. Since human resources are crucial for optimizing resource allocation, the influx of top-tier talent fosters green technological innovation within the company. This innovation, in turn, paves the way for further enhancements in TFP, showcasing the profound impact of social responsibility on a firm’s productivity and sustainable growth trajectory.

Finally, from the perspective of the relationship between governance responsibility performance and total factor productivity, enterprises can improve total factor productivity by improving corporate governance. Specifically, enterprises with good governance performance pay more attention to improving corporate governance issues and can form a perfect internal supervision mechanism and management system. On the one hand, by fostering harmonious relations and aligning the interests among shareholders, the board of directors, and management, firms can mitigate information asymmetry and principal–agent conflicts. This alignment not only standardizes internal managerial actions but also enhances decision-making precision. It streamlines the distribution of rights, decision-making, and operational processes, thereby boosting both efficiency and enterprise value [40]. Such improvements directly contribute to elevating TFP and fostering long-term corporate growth. On the other hand, enhancing employee welfare, refining incentive policies, and providing clear advancement paths are crucial for bolstering staff engagement and transparency in management. These measures facilitate human resource development and spark innovation, creating a symbiotic relationship between employee satisfaction and corporate achievement. Ultimately, these strategies lead to an uplift in the enterprise’s TFP.

Total Factor Productivity (TFP) is largely driven by efficiency gains, technological progress, and scale effects, with the former two being crucial for its enhancement. Companies that excel in ESG performance embody principles of ecological conservation, social responsibility, and robust governance [41]. This approach aligns with green and sustainable development ideologies, ensuring that the needs of various stakeholders are met harmoniously, and fostering long-term, stable, and mutually beneficial partnerships. Such firms gain distinct advantages, including policy support, enhanced financing options, talent attraction, and improved corporate governance. These benefits facilitate optimal resource allocation and spur technological innovation, which in turn reduces costs and boosts efficiency, thereby elevating TFP and securing the company’s long-term growth. Synthesizing the above analysis, this paper puts forward Hypothesis 1.

H1. 

Higher ESG Score Increases Firms’ Total Factor Productivity.

2.2. Moderating Role of CEOs’ Overseas Experience

In studies related to ESG performance, some scholars have focused on the impact of board structure on the role of ESG. For example, Husted BW et al. [42,43,44] studied the impact of board size, presence of women on the board, CEO duality, and independent directors on ESG disclosure and found that board size and independent directors have a positive impact on ESG disclosure, but women on the board and CEO duality harm ESG disclosure; Yiwei Li et al. [45], on the other hand, studied this from the perspective of CEO rights and argued that higher CEO power enhances the role of ESG disclosure on firm value. This paper argues that including CEOs’ overseas experience as a moderating variable in the study of the impact of ESG performance on total factor productivity will clarify the mechanism of the role of ESG performance in affecting total factor productivity at a deeper level.

According to branding theory, individuals will create cognitive imprints during their interactions with specific environments, and these imprints have a certain degree of inertia, which will have a continuous impact on their life values. Under the influence of foreign values and business ethics, CEOs with overseas experience usually have a broader international vision and more precise macroeconomic control [46,47], and can recognize and deeply understand the unique contribution of the ESG development model to corporate value creation at an early stage. Compared with local CEOs, returnee CEOs pay more attention to corporate ESG performance and are more sensitive to ESG-related information [26]. In addition, it is easier for them to make strategic decisions about ESG responsibility fulfillment [48], so good ESG performance can more effectively play a positive role in promoting enterprises’ total factor productivity and then drive the enterprises to better integrate into China’s greening and decarbonization transformation and development trend, as well as to plan for the enterprises’ long-term sustainable development mode. Meanwhile, resource-based theory mentions that enterprises with scarce and irreplaceable resources tend to have more advantages in competition. Returnee CEOs can help ESG performance improve the total factor productivity of enterprises by enhancing their human resources. First of all, returnee CEOs themselves are unique human resources of enterprises [49]. With overseas study exchanges and work experience, returnee CEOs are familiar with cutting-edge business knowledge and international business concepts, and have a greater advantage in access to information and human resources, which enables them to accurately identify possible problems in ESG practices, fully integrate and utilize global resources, and adjust ESG performance to positively promote total factor productivity. Furthermore, returnee CEOs are more focused on investing in the human capital of the enterprise. They not only focus on attracting highly educated and high-level professionals from all walks of life into the enterprise, but also pay attention to the training and education of employees within the enterprise to maximize the effectiveness of human capital in the enterprise’s ESG practice, provide the necessary human support for obtaining good ESG performance, and make it possible to improve total factor productivity. Given the above analysis, this paper proposes Hypothesis 2.

H2. 

Having CEO Overseas Experience Positively Promotes the Effect of ESG Performance on Firms’ Total Factor Productivity.

2.3. Sample Selection and Data Sources

Due to the late start of ESG-related research in China and the inherent lag in data updating, this paper found that there is a more serious missing data problem before 2011 when collating ESG rating data, and found that the data of 2021 are the latest currently available. Therefore, this paper selects Chinese A-share listed companies from 2011 to 2021 as a sample to obtain more complete data. Meanwhile, to ensure the accuracy of the data, the following treatments are carried out: (1) samples with missing data on key variables are excluded; (2) firms in the financial industry are excluded; (3) firms in the special treatment category (ST, *ST, and PT) are excluded; and (4) to control the effect of outliers, the main variables are reduced at the upper and lower 1% levels. Finally, 9128 valid observations are obtained. Among them, ESG rating data are adopted from the ratings provided by the Bloomberg database, and other financial data are taken from the CSMAR database.

2.4. Definition of Variables

2.4.1. Explained Variables

Total Factor Productivity (TFP). Total factor productivity (TFP) is a comprehensive measure of the overall efficiency of a firm. Currently, the mainstream methods for measuring total factor productivity in the literature include the LP method, OP method, OLS method, and FE method. Considering that the LP method can better solve the problems of selectivity bias and endogeneity [50], this paper draws on Levinsohn and Petrin’s [51] approach to measure total factor productivity. The specific measurement model is as follows:

$${lnY}_{it}={\alpha }_0+{\alpha }_1{lnK}_{it}+{\alpha }_2{lnL}_{it}+{\alpha }_3{lnM}_{it}+{\epsilon }_{it}$$

(1)

where Y stands for total output (business revenue of the firm), K stands for capital inputs (the ratio of cash paid to construct fixed assets and intangible assets to total assets), L stands for labor inputs (the number of workers in the firm), and M stands for inputs of intermediate goods (the ratio of cash paid for the purchase of goods and acceptance of labor services to total assets).

2.4.2. Explanatory Variables

ESG Performance (ESG). This paper refers to the Wang et al. [52,53,54,55] approach and uses the more maturely developed Bloomberg ESG rating data as a proxy variable for measuring corporate ESG performance. The Bloomberg database is known for its broad coverage and detailed ESG metrics. The dataset covers 11 years of time and includes Chinese companies from different industries, ensuring a comprehensive and representative analysis of the ESG performance of the entire Chinese corporate sector. The rating expresses corporate ESG performance in terms of a score, with a higher score indicating a higher degree of fulfillment of the corresponding responsibilities.

2.4.3. Moderating Variables

CEO Overseas Experience (OVERSEAS). Currently, commonly recognized overseas experience refers to overseas posting experience and study experience. By reviewing the resume database of personal characteristics of directors and supervisors in Cathay Pacific CSMAR, this paper refers to the study of Cao, Wang, Li, and Zheng [56], which looked at the overseas posting and study experience used to measure the overseas experience of CEOs of firms, and this was considered a dummy variable. The value of the dummy variable is 1 if the CEO has overseas posting or study experience, and 0 otherwise.

2.4.4. Control Variables

To alleviate the endogeneity problem arising from omitted variables, referring to the practice of existing related literature, this paper sets the following control variables: (1) company size (SIZE): obtained by taking the natural logarithm of the total number of employees of the enterprise; (2) profitability (ROE): expressed by net profit/average balance of shareholders’ equity; (3) solvency (LEV): expressed by total assets/total assets at the end of the year; (4) board of directors size (BOARD): obtained by taking the natural logarithm of the total number of people on the board of directors; (5) operating capacity (TAT): expressed as operating income/average total assets; (6) Tobin’s Q (TOBINQ): expressed as market capitalization/total assets.

The relevant study variables are defined in

Table 1. Description of variables.

Nature of the Variable	Variable Name	Notation	Description of Variables	Source (of Information etc.)
Explanatory variable	Total factor productivity	TFP	Measured by the LP method to obtain	(Levinsohn & Petrin, 2003) [51]
Explanatory variable	ESG performance	ESG	ESG scores from the Bloomberg database	(Nollet, Filis, & Mitrokostas, 2016; Wang & Sarkis, 2017; Yu, Guo, & Luu, 2018) [52,53,54]
Moderator variable	CEO overseas experience	OVERSEAS	Overseas experience	(Cao, Wang, Li, & Zheng, 2022) [56]
	Company size	SIZE	Natural logarithm of the total number of employees in the enterprise
	Profitability	ROE	Net profit/average balance of shareholders’ equity
Control variable	Solvency	LEV	Total assets/total assets at the end of the year	(Cao, Sun, & Yuan, 2019; Huang, 2013; Quan, Ke, Qian, & Zhang, 2023) [57,58,59]
	Board size	BOARD	Natural logarithm of the total number of board members	(Huang Bo, Li Haitong, Jiang Ping, & Lei Jinghua, 2022) [60]
	Operating ability	TAT	Operating income/average total assets
	Tobin’s Q	TOBINQ	Market capitalization/total assets

.

2.5. Modeling

In order to investigate the effect of ESG performance on total factor productivity, the following model (2) is set to verify H1:

$${TFP}_{it}={\beta }_0+{\beta }_1{ESG}_{it}+{Controls}_{it}+\sum Industry+\sum Year+{\epsilon }_{it}$$

(2)

To explore the moderating role played by CEO overseas experience between ESG performance and total factor productivity, the following model (3) is set up to verify H2:

$${TFP}_{it}={\beta }_0+{\beta }_1{ESG}_{it}+{\beta }_2{OVERSEAS}_{it}+{\beta }_{3}ESG\times {OVERSEAS}_{it}+{Controls}_{it}+\sum Industry+\sum Year+{\epsilon }_{it}$$

(3)

In Equations (2) and (3), TFP is the total factor productivity (calculated by the LP method), ESG is the ESG performance (using the Bloomberg ESG rating data), OVERSEAS is the CEO’s overseas experience (measured by the CEO’s overseas employment and study experience) and represents the interaction between ESG performance and the CEO’s overseas experience, Controls is the control variable, Industry is the industry fixed effect, and Year is the year fixed effect. i represents the enterprise, t represents the year, and ε is the random perturbation term.

3. Results

3.1. Descriptive Statistics

From the descriptive statistical analysis in

Table 2. Descriptive statistics.

Variable	N	Mean	SD	Min	Max.
TFP	9128	14.84	0.791	13.14	16.96
ESG	9128	28.45	8.540	13.07	54.86
OVERSEAS	9128	0.427	0.495	0	1
SIZE	9128	8.522	1.242	5.533	11.83
ROE	9128	0.0790	0.127	−0.668	0.354
BOARD	9128	2.168	0.201	1.609	2.708
TAT	9128	0.681	0.478	0.0440	2.775
TOBINQ	9128	1.967	1.380	0.828	8.783
DUAL	9128	0.225	0.417	0	1

, it can be seen that: the minimum value of total factor productivity (TFP) is 13.14, the maximum value is 16.96, and the mean and standard deviation are 14.84 and 0.791, respectively, indicating that there are large differences in total factor productivity among different enterprises; the minimum value of quantitative ESG performance (ESG) scores is 13.07, the maximum value is 54.86, and the mean and standard deviation are 28.45 and 8.540, respectively. The minimum value of ESG performance (ESG) is 13.07, the maximum value is 54.86, and the mean value and standard deviation are 28.45 and 8.540, respectively. On the whole, there are relatively few enterprises with better ESG performance, and there is a significant difference in ESG performance among different enterprises; the mean value and standard deviation of CEOs’ overseas experience (Overseas Experience) are 0.427 and 0.495, respectively, which indicate that there is a difference in CEOs’ overseas experience among different enterprises. All financial indicators of the sample firms have some differences.

3.2. Correlation Analysis

The results of the correlation analysis of the variables between Total Factor Productivity and ESG Performance in this paper are shown in

Table 3. Correlation analysis.

	TFP	ESG	SIZE	ROE	BOARD	TAT	TOBINQ	DUAL
TFP	1
ESG	0.281 ***	1
SIZE	−0.086 ***	0.328 ***	1
ROE	0.133 ***	0.019 *	0.071 ***	1
BOARD	0.058 ***	0.039 ***	0.188 ***	−0.0120	1
TAT	0.121 ***	−0.00200	0.255 ***	0.198 ***	−0.018 *	1
TOBINQ	−0.205 ***	−0.025 **	−0.240 ***	0.206 ***	−0.156 ***	0.0110	1
DUAL	−0.081 ***	0.00700	−0.064 ***	0.055 ***	−0.185 ***	0.00600	0.132 ***	1

*** p < 0.01, ** p < 0.05, * p < 0.1.

.

The correlation coefficient of ESG performance is 0.281, and it is significant at the 1% level. ESG performance has a positive correlation with enterprise total factor productivity, which initially verifies H1. The correlation coefficients of the main variables and the correlation coefficients of the control variables are all less than 0.5, which indicates that the variables chosen for the study are reasonable and exclude the problem of multiple covariance in the model.

3.3. Analysis of Regression Results

Table 4. Regression results for Equations (2) and (3).

	TFP_(2)	TFP_(3)
ESG	0.006 ***	0.006 ***
	(7.47)	(7.28)
OVERSEAS ESG*OVERSEAS		0.006 (0.66) 0.001 ** (2.43)
SIZE	−0.210 ***	−0.211 ***
	(−26.35)	(−26.36)
ROE	0.478 ***	0.478 ***
	(15.60)	(15.60)
BOARD	0.161 ***	0.160 ***
	(5.12)	(5.06)
TAT	0.500 ***	0.501 ***
	(30.89)	(30.95)
TOBINQ	−0.021 ***	−0.021 ***
	(−5.46)	(−5.51)
DUAL	−0.013	−0.013
	(−1.10)	(−1.10)
Constant	15.425 ***	15.427 ***
	(166.95)	(166.84)
Industry Year	Yes Yes	Yes Yes
Observations	9128	9128
R-squared	0.400	0.400
adj_R2 F	0.310 310.9	0.310 278.6

t-statistics in parentheses. *** p < 0.01, ** p < 0.05.

shows the test results of ESG performance and firms’ total factor productivity. The results show that the regression coefficient between ESG performance and firms’ total factor productivity is 0.006 and is significant at the 1% level, which indicates that a higher ESG score can increase firms’ total factor productivity and H1 is valid.

Table 5. GMM test.

	TFP_1	TFP_2
L.TFP	0.765 ***	0.770 ***
	(20.32)	(19.59)
ESG ESG*OVERSEAS SIZE	0.010 *** (7.16) −0.066 ***	0.010 *** (7.04) 0.001 *** (2.53) −0.067 ***
	(−6.43)	(−6.34)
ROE	0.504 ***	0.508 ***
	(9.19)	(9.25)
BOARD	0.059 *	0.055
	(1.70)	(1.61)
TAT	0.110 ***	0.112 ***
	(5.87)	(5.85)
TOBINQ	−0.039 ***	−0.040 ***
	(−5.31)	(−5.31)
DUAL	−0.010	−0.012
	(−0.73)	(−0.88)
Constant	3.654 ***	3.736 ***
	(6.29)	(6.20)
Observations Number of groups	7692 1130	7692 1130

t-statistics in parentheses. *** p < 0.01, * p < 0.1.

presents the results of the test of ESG performance against total factor productivity after considering the moderating variable of CEOs’ overseas experience. OVERSEAS is added to the model, as well as the interaction term between ESG and OVERSEAS. The results show that the regression coefficient of the interaction term ESG* OVERSEAS is 0.001 and is significant at the 5% level, indicating that CEOs’ overseas experience plays a positive moderating role in the relationship between firms’ ESG performance and total factor productivity, and H2 is verified. It is important to note that the distinguishing factor for the results of models (2) and (3) is the CEOs’ overseas experience.

3.4. Endogeneity Analysis

GMM test. The GMM test is advantageous in dealing with lagged effects and endogeneity issues, especially in the presence of lagged effects and construction errors in the dependent variable. In order to solve the endogeneity problem brought by the dynamic panel, this paper conducts a GMM test. The test results are shown in Table 5, the regression coefficient of ESG is 0.01 and significant at the 1% level, reflecting the promotion of total factor productivity by good ESG; column TFP_2 exhibits the results of the test considering the effect of CEOs’ overseas experience, and the productivity interaction term, ESG* OVERSEAS, is significant at the 5% level, suggesting that CEOs’ overseas experience plays a positive moderating role in the effect of ESG performance on total factor productivity. It can be seen that the conclusion of this paper still holds after the GMM test.

3.5. Robustness Analysis

Replace the explanatory variables. To prevent the influence of potential metric bias on the empirical results, this paper reruns the empirical analysis by using total factor productivity (TFP_OLS) calculated by the OLS method, and total factor productivity (TFP_FE) calculated by the FE method as the proxy variables for total factor productivity (TFP), respectively. The empirical results are shown in

Table 6. Robustness test.

	TFP_OLS	TFP_FE
ESG	0.007 ***	0.006 ***
	(7.83)	(7.21)
OVERSEAS ESG*OVERSEAS SIZE	−0.004 (−0.39) 0.001 *** (2.83) −0.167 ***	−0.001 (−0.09) 0.001 ** (2.51) 0.013
	(−19.37)	(1.51)
ROE	0.440 ***	0.348 ***
	(13.27)	(10.93)
BOARD	0.175 ***	0.156 ***
	(5.10)	(4.75)
TAT	0.854 ***	0.869 ***
	(48.79)	(51.66)
TOBINQ	−0.016 ***	−0.022 ***
	(−4.00)	(−5.54)
DUAL	−0.018	−0.016
	(−1.37)	(−1.31)
Constant	14.403 ***	15.307 ***
	(143.96)	(158.28)
Industry Year	Yes Yes	Yes Yes
Observations	9128	9128
R-squared	0.416	0.488
adj_R2 F	0.329 297.4	0.412 398.7

t-statistics in parentheses. *** p < 0.01, ** p < 0.05.

, the regression coefficients of ESG are 0.007 and 0.006, respectively, and both are significant at a 1% level, indicating that ESG performance helps to enhance the total factor productivity of the firms. The interaction term ESG*OVERSEAS is significantly positive at the 1% and 5% levels, respectively, indicating that the CEOs’ overseas experience positively moderates the effect of ESG performance on total factor productivity. Therefore, the research findings remain valid after replacing the explanatory variable measures.

Based on the endogeneity and robustness analysis above, it can be seen that the test results are basically consistent with the baseline regression results, and the coefficients and significance levels of the explanatory variables and interaction terms have not changed significantly. Therefore, the regression results are relatively robust.

4. Discussion and Conclusions

The “dual-carbon goal” is a development proposition based on a harmonious coexistence of human beings and nature, and is a powerful platform for realizing a comprehensive green transformation of society and the economy. In the context of the “dual-carbon” initiative, the ESG framework, which embodies the interests of multiple stakeholders, has garnered increasing focus. Society at large urges businesses to prioritize ecological preservation, actively embrace social responsibilities, and enhance their governance practices. This approach aims to leverage ESG performance as a catalyst for fostering both the green transformation of the socio-economic landscape and the sustainable progression of society and the economy.

This paper empirically analyzes the relationship between corporate ESG performance and total factor productivity (TFP) against the background of “dual-carbon”, and introduces CEOs’ overseas experience as a moderating variable to deeply analyze the mechanism of the impact of ESG performance on TFP. The results of the study showed that good corporate ESG performance can significantly promote total factor productivity, while CEOs’ overseas experience can positively regulate the promotion effect of corporate ESG performance on total factor productivity. After undergoing further endogeneity and robustness tests, the research conclusions still hold.

The theoretical contributions of this paper may be as follows: first, it enriches the literature research in ESG-related fields. Existing published literature pays less attention to the aspects of ESG and corporate productivity; and to enrich the research in related fields, this paper linked ESG performance and corporate total factor productivity. Through empirical analysis, it was found that ESG performance made a significant positive contribution to total corporate factor productivity, which further fills the theoretical gaps in ESG research while inspiring ESG-related practices. Second, CEOs’ overseas experience was innovatively introduced as a moderating variable. In the study of ESG performance and total factor productivity, this paper innovatively introduced CEOs’ overseas experience as a moderating variable and found that it could positively modulate the promotion of ESG performance on total factor productivity, which provides new perspectives and insights for ESG-related fields and is of certain inspirational significance. Third, the study incorporated the research background of “carbon neutrality and peak carbon”. This paper was based on the background of “dual-carbon”, combined with the reality of contemporary Chinese society, and organically combined ESG research with the ecological development concept of “green, healthy and sustainable”, which is in line with the concept of “Harmonious coexistence between humans and nature”. This is in line with the concept of green development, which stands for the “harmonious coexistence of human beings and nature” and helps to promote the green and healthy development of society and the economy, and enhance the international community’s understanding and recognition of China.

The practical contributions of this paper may be as follows:

First, strong ESG performance enables companies to meet the varied needs of stakeholders effectively, securing their trust and support. This fosters enduring, positive interactions between companies and stakeholders, turning exceptional Total Factor Productivity (TFP) into a distinct competitive edge that fuels high-quality and robust enterprise growth. To capitalize on this, companies must prioritize ESG strategically, integrating it into their core strategy and daily operations. This involves crafting a precise, long-term ESG roadmap, establishing a comprehensive ESG governance framework, enhancing transparency through regular ESG disclosures, and amplifying ESG investments tailored to their development goals. By leveraging their resources and strengths to elevate ESG performance, enterprises can achieve a sustainable transformation, advancing the harmonious progress of the economy, society, and environment.

Second, the government plays a crucial role in forging the path of economic and social development. To address ESG challenges effectively, the government and related agencies must adopt proactive and holistic approaches. This includes crafting detailed ESG frameworks and policies, establishing dedicated ESG regulatory bodies, fostering the growth of ESG rating and certification entities, enhancing ESG-focused training and education, encouraging corporate engagement in ESG initiatives, and ensuring robust cooperation and dialogue with stakeholders. Such measures are crucial for advancing the “dual-carbon” objective and driving the transition towards a more sustainable and green economy.

Third, investors ought to elevate their understanding of ESG considerations, balancing their focus on immediate financial returns with the recognition of ESG factors’ influence on a company’s enduring value. By integrating ESG criteria into their investment decision-making and strategies, they can bolster the sustainability and long-term profitability of their portfolios. Additionally, investors should engage collaboratively with companies and regulatory bodies to gain insights into their ESG approaches and operations. Employing the expertise of specialized ESG investment advisors or firms for thorough analysis and research on prospective investments can further enrich their contributions to ESG investment, collectively fostering green and sustainable socio-economic progress.

Fourth, CEOs’ overseas experience plays a significant and positive moderating role in the impact of ESG on total factor productivity, which shows that it occupies a special position in the process of promoting ESG development. In implementing ESG principles, it is crucial to focus on CEOs with international experience. A thorough evaluation of their capabilities and potential is essential for a deeper appreciation of their contributions. Providing the necessary support for these leaders to assimilate into the local culture and adapt to domestic markets is important. Moreover, emphasizing effective teamwork, communication, and the design of appropriate incentive systems are key strategies to motivate these executives. By doing so, we encourage them to introduce diverse perspectives and innovative ideas into ESG initiatives. Such contributions from globally experienced CEOs are invaluable in driving ESG’s long-term objectives, facilitating a sustainable and green societal and economic transformation, and advancing the ideal of harmonious coexistence between humanity and the natural world.

The limitations of this paper may be as follows: first, the sample size was relatively small and may not be representative of the entire target group. Second, the sample’s data source was limited to China and may not be generalized to a wider region. Third, due to the limitation of research time and resources, it was not possible to analyze all relevant variables in depth. Fourth, the CEOs’ overseas experience was measured only on a binary basis (CEO performance is irrelevant), which limits the use of results to some extent. The above limitations may have some impact on the generalizability and accuracy of the study results. Future research can further improve and refine the relevant studies by expanding the sample size, selecting data from multiple countries, and analyzing the relevant variables in depth.