Does Green Finance Development Enhance the Sustainability Performance of China’s Energy Companies?

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The paper Does green finance development enhance the sustainability performance of China's energy companies aims to contribute to the formulation and implementation of effective green finance policies. The manuscript is well structured, clearly written, and provides a novel contribution to the growing body of evidence on the previously explained topic.  I would advise authors to make a couple of additions to their paper:

- provide a paragraph of the explanation of the main contributions of this study as early as in the introduction of the paper (similar to already presented in the abstract).

- explain the main limitations of the study in the conclusions.

Author Response

Dear reviewers:

Thank you for taking the time to review my manuscript. Your suggestions are crucial to the quality of the article, and we have made some revisions to the manuscript based on your suggestions. The point-to-point revisions are described below:

Comments 1: Provide a paragraph of the explanation of the main contributions of this study as early as in the introduction of the paper (similar to already presented in the abstract).

Response 1: Thank you for pointing this out. We agree with this comment. Therefore, based on your comments and in conjunction with the conclusions of this study, a three-point marginal contribution has been added to the introductory section:

The marginal contributions of this paper are as follows:

(1) Taking listed Chinese energy enterprises as the research object, we start from the green finance perspective to explore the impact of green finance on the sustainability performance of different types of enterprises due to the differences in the impact of green finance on the sustainability performance of different types of enterprises.

(2) The level of green finance in the city where each energy enterprise is located was measured. This paper selected seven dimensions: green credit, green investment, green support, green insurance, green bond, green fund, and green equity, and measured the comprehensive index of green finance financing level in the city where each energy enterprise is located in order to comprehensively examine the impact on the sustainable development performance of energy enterprises.

(3) This paper reveals the impact mechanism of green finance on the sustainable development performance of energy enterprises from the perspectives of financing constraints and green total factor productivity.

 

Comments 2: Explain the main limitations of the study in the conclusions.

Response 2: Thank you for pointing this out. We agree with this comment. Therefore, we include the limitations of this study at the end of the final conclusion.

This paper may have the following research deficiencies:

(1) In the sample selection, this paper considers the availability of data; only selected Shenzhen and Shanghai A-share listed energy enterprise data as a research sample. Many of the unlisted enterprises are not included in the scope of the study. Unlisted enterprises, compared to the listed enterprises, financing channels are more narrow, and the impact of green finance will be different from the impact of the listed enterprises, so it can be perfected from this aspect.

(2) The accuracy of some data needs to be further improved. There are some limitations in the selection of the explanatory variables in this paper, i.e., the indicators of green finance. Although scholars at this stage are mostly sure that this indicator can represent the level of development of green finance, it also has its shortcomings, and future research can be more precise to measure the green finance development index of each enterprise.

(3)In this paper, in the process of researching and analyzing the relationship between green finance and sustainable development performance, some key constraints may be missed. Green finance, in the process of conduction to the sustainable development performance of enterprises, future research can further expand the study of the impact path.

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

1.     How does the study specifically measure the impact of green finance on the innovative performance of energy firms? What are the key mechanisms driving the observed differences between large and small energy enterprises in terms of sustainable development performance?

2.     How do the interconnections between economic, environmental, social, and innovation performance dimensions influence the overall impact of green finance on sustainable development?

3.     Additionally, what are the potential barriers or limitations of green finance that could affect its effectiveness in enhancing the sustainable development performance of energy enterprises?

4.     How were the exclusion criteria specifically applied to the data, and what impact did these exclusions have on the final dataset used in the analysis?

5.     Some papers are very important for citation

·       The impact of CSR and green consumption on consumer satisfaction and loyalty: moderating role of ethical beliefs.

·       Sustainable infrastructure, energy projects, and economic growth: mediating role of sustainable supply chain management

6.     Can the paper provide more detailed definitions and justifications for key variables, such as the Green Finance Index and Tobin's Q, to clarify their relevance to the study?

7.     How does the study plan to quantify the potential impact of the proposed recommendations on the sustainable development performance of energy enterprises?

 

 

Author Response

Dear Reviewer:

We are very grateful to you for taking your valuable time to make constructive comments. We have already made some changes to the manuscript based on your comments. Here are some point-to-point responses:

Comments 1: How does the study specifically measure the impact of green finance on the innovative performance of energy firms? What are the key mechanisms driving the observed differences between large and small energy enterprises in terms of sustainable development performance?

Response 1: (1) This study uses the number of enterprise patent applications to measure innovation performance; the number of patent applications is relatively more representative of the actual innovation level of the enterprise, so it is chosen as a measure of innovation performance. Green finance is measured by the green financial development index of the city where the energy enterprise is located, and the empirical study finds that the improvement of the level of green financial development of the energy enterprise will promote the improvement of its innovation performance.

(2) The main driving mechanism for the differences in sustainable development performance between large and small energy enterprises may be the differences in the size of economies of scale, technological innovation capacity, financial strength, and policy support. ① Economies of scale: large energy companies usually have a larger scale and can realize economies of scale through mass production to reduce costs, improve efficiency, and thus have better performance in sustainable development. ② Technological innovation: large energy companies usually have more research and development resources and talents and are able to carry out more technological innovation, improve energy efficiency, reduce environmental pollution, and thus perform better in sustainable development. Financial strength: large energy companies usually have stronger financial strength and can undertake more environmental protection and sustainable development projects, such as the development and application of clean energy projects. In contrast, small energy companies may not be able to invest enough resources in sustainable development-related projects due to financial constraints. Policy support: Large energy enterprises tend to be able to obtain more policy support, including government subsidies, tax incentives, etc., which can help them improve their sustainable development performance, while small energy enterprises may be at a disadvantage in seeking policy support.

Comments 2: How do the interconnections between economic, environmental, social, and innovation performance dimensions influence the overall impact of green finance on sustainable development?

Response 2: Green finance positively affects the four dimensions of economy, environment, society, and innovation performance by promoting the environmentally sustainable development of enterprises, raising their awareness and concern for environmental social responsibility, and promoting the development of green innovation technology and economic and financial performance, thus promoting the improvement of the overall sustainable development of enterprises.

(1) Economic dimension: green finance, through optimizing resource allocation, guides the flow of funds to green and low-carbon areas and promotes the efficient use of resources while improving the quality of the ecological environment. This optimization of resource allocation contributes to the transformation of the economic structure and promotes the development of the economy in a greener and more sustainable direction.

(2) Environmental dimension: green finance provides financial support for environmental protection and governance by promoting environmentally sustainable development and reducing environmental risks and losses. It guides the flow of funds to environmentally friendly industries and projects and reduces the reliance on traditional high-pollution and high-energy-consumption industries, thus reducing environmental pollution and ecological damage.

(3)Social dimension: the development of green finance raises social awareness and concern about environmental issues. Financial institutions and investors take environmental factors into consideration when making decisions, pushing enterprises and industries to pay more attention to environmental protection and sustainable development. This increased environmental awareness and responsibility will prompt more enterprises to adopt environmentally friendly business models.

(4) Innovation Performance Dimension: Green finance encourages the development of innovation, promotes the emergence of new technologies, products, and models, and injects new impetus for economic growth. By providing financing support to green industries and environmentally friendly projects, green finance promotes a green economy and innovation and helps to improve the long-term stability and competitiveness of the economy.

Comments 3: Additionally, what are the potential barriers or limitations of green finance that could affect its effectiveness in enhancing the sustainable development performance of energy enterprises?

Response 3: Thank you for your question.Potential barriers or constraints faced by green finance in enhancing the sustainable development of energy enterprises mainly include the irrational supply structure of green financial products, the slow development of innovative products, as well as the widening gap in the supply capacity of financial institutions for green finance and the insufficient enthusiasm of small and medium-sized financial institutions to participate in it.

(1) The irrational supply structure of green financial products and the slow development of innovative products are an important factor affecting the development of green finance. At present, green credit is the main form of green finance, occupying more than 90% of the total scale of green finance, while the development of green development funds, green insurance, and carbon financial products is relatively lagging behind and small in scale. This structure limits the ability of financial institutions to provide a full range of customized green financial services, including long-term equity financing and risk-hedging tools, for different types of green projects with different life cycles.

(2) The widening gap in the ability of financial institutions to supply green finance and the insufficient enthusiasm of small and medium-sized financial institutions to participate are another limiting factor. China's green credit development is mainly led by large banks, with small and medium-sized banks and other financial institutions having a weak sense of existence and a low degree of participation, and the supply of green finance is mainly gathered to large enterprises and large-scale projects, while the financing capacity of localized and characteristic green projects is weak. Under such circumstances, the financing needs of small and medium-sized enterprises are often not met, affecting the sustainable development of small and medium-sized enterprises such as energy enterprises.

Comments 4: How were the exclusion criteria specifically applied to the data, and what impact did these exclusions have on the final dataset used in the analysis?

Response 4 : (1) ST and ST* companies represent special values or outliers in many contexts. During data processing, these special values may interfere with our overall analysis and understanding of the data. For example, when performing statistical analysis, outliers may significantly affect the credibility of the results. If these special values are not properly handled, they may lead to wrong conclusions or misleading decisions. Therefore, in order to get more accurate results, we need to eliminate these exceptional values.

② The reason for excluding firms that have been listed for less than three years is the market maturity and information asymmetry of such firms. In a mature market, listing and delisting, splits and mergers are the norm, while newly listed companies may suffer from information asymmetry. Fluctuations in the share price of a newly listed company may be affected by a number of factors, including market expectations of the company, investor sentiment, etc., which do not always reflect the intrinsic value of the company. High investment risk and uncertainty. The stock price of a newly listed company may be affected by a variety of factors, including market expectations of the company, investor sentiment, etc., which do not always reflect the intrinsic value of the company. In addition, the financial statements of a newly listed company may contain non-transparent or misleading information, which increases the risk and uncertainty of investment.

③ Missing value processing: Dealing with missing values in data is a common task in data analysis. Through data cleansing, the quality and accuracy of data can be improved to ensure that the data is more suitable for data analysis or data mining.

(2) The impact of the implementation of these exclusion criteria on the final dataset is mainly reflected in the following aspects:

Improved data quality: by excluding data that do not meet the criteria, noise and outliers in the dataset can be reduced, thereby increasing the accuracy and reliability of the data analysis. Enhancing the validity of the analysis: it ensures that the data used for analysis is accurate, complete and relevant, thus enhancing the validity and credibility of the analysis results. Optimize the decision-making process: Decisions based on high-quality data sets are more reliable, helping to avoid poor decisions caused by data problems.

Comments 5: Some papers are very important for citation:

The impact of CSR and green consumption on consumer satisfaction and loyalty: moderating role of ethical beliefs.

Sustainable infrastructure, energy projects, and economic growth: mediating role of sustainable supply chain management

Response 5 : We sincerely appreciate your valuable comments and we have carefully read the literature provided by you and introduced it as a reference in the paper.

Comments 6: Can the paper provide more detailed definitions and justifications for key variables, such as the Green Finance Index and Tobin's Q, to clarify their relevance to the study?

Response 6 : (1) Tobin's Q is an indicator that measures the ratio between the market value of an enterprise and its replacement cost, reflecting the market's expectation of the enterprise's future profitability. Therefore, when the green finance index rises, it means that more funds support the development of the green industry, which will promote the increase of enterprise value and thus affect the Tobin's Q value.

(2)Enterprise environmental protection investment refers to the general term for all kinds of actions taken by enterprises in order to solve real or potential environmental problems, harmonize the relationship between enterprises and the environment, and guarantee the sustainable development of enterprises.The Green Finance Index focuses on sustainable investment by integrating environmental and social considerations, emphasizing the identification and management of risks associated with environmental and social factors and promoting the transparent disclosure of those risks. Such mechanisms help to improve the efficiency of green investments and ensure that funds are utilized for projects that are truly environmentally and socially beneficial, thereby improving the quality and effectiveness of green investments.

(3) Corporate social responsibility refers to the fact that enterprises, while generating profits and assuming legal responsibility for shareholders and employees, must also assume responsibility for consumers, communities and the environment. Corporate social responsibility requires that enterprises must go beyond the traditional concept of profit as their only goal and emphasize the need to pay attention to human values in the production process and to make contributions to the environment, consumers and society. By promoting environmental protection and governance, the green financial policy guides the flow of resources from high-pollution and high-energy-consumption industries to sectors with advanced concepts and technologies, thus promoting enterprises to increase their environmental investment and enhance their level of corporate social responsibility. The green finance policy encourages enterprises to accelerate the transformation of their industrial structure, actively develop and utilize renewable energy sources, and realize green development, which has a positive impact on enhancing the level of corporate environmental and social responsibility.

(4) The number of patent applications filed by an enterprise refers to the number of patent applications filed by an enterprise in a particular technical field within a specific period of time. The number of enterprise patent applications can reflect the innovation ability and technical strength of the enterprise in a specific technical field. The development of green finance can not only promote enterprises to carry out more green technological innovation but also indirectly promote the increase of the number of patent applications by improving the green innovation efficiency of enterprises. The rise in the green finance index not only reflects the promotion and implementation of green finance policies but also signals an increase in green technological innovation activities by enterprises, including an increase in the number of patent applications.

Comments 7: How does the study plan to quantify the potential impact of the proposed recommendations on the sustainable development performance of energy enterprises?

Response 7 : In order to quantify the potential impact of the proposed recommendations on the sustainable development performance of energy enterprises, this study plans to construct a comprehensive evaluation indicator system: based on the theory of enterprise performance evaluation for sustainable development, a system of evaluation indicators that includes four aspects: economic, social, environmental and innovation. This system should contain strategic indicators, management indicators and operational indicators to comprehensively evaluate the performance of enterprises in sustainable development. The entropy method can also be used to calculate the weights of the indicators. This method allows weights to be assigned objectively according to the degree of variability of the indicators, thus reflecting more accurately the impact of each indicator on the overall sustainable development performance.

Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

This is a very interesting topic.

The paper is well structured.

The literature review is adequate and the arguments on hypotheses formulation are well presented.

The methodology used is analytically explained.

The paper's quality would be improved if the results obtained were compared and critically evaluated against those obtained by previous studies for China and other countries (if any)

 

Author Response

Dear reviewers

We are very glad that you are interested in our topic and provide constructive comments, based on your suggestions, we make the following reply:

Comments 1 : This is a very interesting topic.

The paper is well structured.

The literature review is adequate and the arguments on hypotheses formulation are well presented.

The methodology used is analytically explained.

The paper's quality would be improved if the results obtained were compared and critically evaluated against those obtained by previous studies for China and other countries (if any)

Response 1 : Your comments are very valuable, we really did not consider the cross-sectional comparative analysis of relevant studies between China and other countries, the main purpose of this study is to explore the impact of the level of green finance development on the sustainable development performance of listed energy companies in China, and put forward corresponding policy recommendations for the improvement of China's green finance policy and the sustainable development of energy companies. In the follow-up study, we can explore the impact of the level of green finance development on the sustainable development performance of Chinese enterprises in different industries and the cross-sectional comparative analysis with the sustainable development performance of enterprises in other countries.

Author Response File: Author Response.pdf

Reviewer 4 Report

Comments and Suggestions for Authors

Very interesting and actual topic. Corrections for authors:

- Specify the aim of the paper in the Abstract.

- Include chapter related to the structure of the paper at the end of Introduction.

- Highlight which stock exchange in the Data and sources within Materials and Methods.

- Explain why period 2011-2020?

- You put sentence: The entropy method is utilized to measure the level of green financial development in Chinese cities from 2011 to 2020. Which cities? List them in brackets.

- Adjust reference 31 according to Authors' instruction.

- Consider including citations in the context of green finance concept. https://doi.org/10.3390/su15010112  https://doi.org/10.3390/su15075914 

- Compare the obtained findings to previous empirical studies and indicate whether there are differences.

Author Response

Dear Reviewer:

We appreciate your professional review of our manuscript and, as you have expressed concern, there are several issues that need to be addressed. In response to your suggestions, we have made extensive corrections to our previous manuscript, as described in the response below:

Comments 1 : Specify the aim of the paper in the Abstract.

Response 1 : Thank you for pointing this out. We agree with this comment. Therefore, We have added the following to the summary section：

In order to explore the impact mechanism of green finance development level on the sustainable development performance of listed energy enterprises in China, we explore the intrinsic mechanism of green finance-financing constraints-sustainable development performance and green finance-green total factor productivity-sustainable development performance, and provide countermeasures and suggestions for the improvement of energy enterprises' sustainable development capability.

Comments 2 : Include chapter related to the structure of the paper at the end of Introduction.

Response 2 : Thank you for pointing this out. Your suggestion is very valuable and the following has been added at the end of the introduction as per your suggestion:

The rest of the paper is organized as follows:

Chapter 2 describes the latest research on the variables of interest and presents the research hypotheses; Chapter 3 describes the variable measurements and the construction of the theoretical model; Chapter 4 presents the results of the empirical analyses; Chapter 5 further discusses the mechanism of the mediating effect; and Chapter 6 provides the study's conclusions, recommendations, and limitations

Comments 3 : Highlight which stock exchange in the Data and sources within Materials and Methods.

Response 3 : Your suggestion is very desirable, and we have added an explanation to “Data and Sources” in “Materials and Methods” detailing that A-share listed companies are those that have their shares publicly issued and traded on China's Shanghai Stock Exchange and the Shenzhen Stock Exchange for public issuance and trading of stocks. In addition, we chose Shanghai and Shenzhen A-shares because the Shanghai and Shenzhen A-share markets are one of the largest domestic stock markets in China, with a huge market size that contains many listed companies. Therefore, the data of Shanghai and Shenzhen A-share markets can reflect the overall situation of China's domestic economy and the operation of the capital market. In the context of globalization, Chinese companies are also becoming more and more important, and some large-scale Shanghai and Shenzhen A-share listed companies have become strong competitors in the international market. Therefore, analyzing the data of Shanghai and Shenzhen A-share listed companies can also reflect the international competitiveness and future development trend of Chinese enterprises, which is also helpful to understand the global economic situation and the development trend of the capital market.

Comments 4 : Explain why period 2011-2020?

Response 4 : There are two reasons for choosing the 2011-2020 data: (1) We chose the 2011-2020 data because of the rapid development of the digital economy during this period, which has had a far-reaching impact on China's market consolidation, and the high availability and relevance of the data in this timeframe, which can provide the study with a rich data base and in-depth understanding. In addition, the social responsibility disclosure in Hexun.com is currently only updated to 2020, and 2011-2020 is a ten-year period that encompasses the cycle of corporate development.

(2) Since 2011, the digital economy has experienced vigorous development, relying on digital technologies such as artificial intelligence, blockchain and big data, and reconfiguring the system of factors, industry structure and organizational forms of the real economy. This development has facilitated the free flow of data elements, broken local protection and corporate monopoly, and promoted the process of market fragmentation to integration.The data from 2011-2020 covers the period of rapid development of the digital economy, which can reflect the real situation and development trend of the digital economy, and is useful for researching the impact of the digital economy on the integration of China's markets with high availability and relevance.

Comments 5 : You put sentence: The entropy method is utilized to measure the level of green financial development in Chinese cities from 2011 to 2020. Which cities? List them in brackets.

Response 5 : The explanatory variable green financial development index in this study is measured by using the green financial development index of the cities where the energy enterprises are located, a total of 134 enterprises, distributed in 89 cities. The level of green financial development is the result of measuring the seven indicators of green credit, green investment, green support, green insurance, green bond, green fund and green equity by utilizing the entropy method to synthesize them.

Comments 6 : Adjust reference 31 according to Authors' instruction.

Response 6 : We appreciate your suggestion and the text of reference 31 has been adjusted in our paper.

Comments 7 : Consider including citations in the context of green finance concept. https://doi.org/10.3390/su15010112

https://doi.org/10.3390/su15075914

Response 7 : We are very grateful to you for the references, which we have read in detail and found to be very informative, and have added them to the references of the paper already.

Comments 8 :  Compare the obtained findings to previous empirical studies and indicate whether there are differences.

Response 8 : Your suggestion is very valuable, and based on your suggestion, we have included a marginal contribution section of this paper in the introduction, which focuses on the salient features of our paper relative to previous studies.The following section shows the part of the marginal contribution that we add to the paper:

The marginal contributions of this paper are as below:(1) Taking listed Chinese energy enterprises as the research object, we start from the green finance viewpoint to discover the effect of green finance on the sustainability performance of different types of enterprises due to the differences in the effect of green finance on the sustainability performance of different types of enterprises. (2) The level of green finance in the city where each energy enterprise is located was measured. This paper selected seven dimensions: green credit, green investment, green support, green insurance, green bond, green fund and green equity, and measured the overall index of green finance financing level in the city where each energy enterprise is located, in order to comprehensively examine the influence on the sustainable development performance of energy enterprises. (3) This paper reveals the impact mechanism of green finance on the sustainable development performance of energy enterprises from the perspectives of financing constraints and green total factor productivity.

Author Response File: Author Response.pdf