Can ESG Investment and the Implementation of the New Environmental Protection Law Enhance Public Subjective Well-being?

TL;DR

This study shows that China's new Environmental Protection Law and increased corporate ESG investments significantly reduce air pollution and enhance public subjective well-being, supporting sustainable development efforts.

Contribution

It provides empirical evidence on the combined effects of environmental legislation and ESG investments on air quality and well-being in China.

Findings

ESG investments reduce air pollution levels

Environmental law implementation improves public well-being

Policies significantly impact sustainable development

Abstract

Air pollution has emerged as a serious challenge for China, posing a threat to public health and hindering the progress of sustainable economic development. In response to air pollution and other environmental issues, the Chinese government introduced a new Environmental Protection Law in 2015. This paper investigates the impact of the new Environmental Protection Law's implementation and corporate Environmental, Social, and Governance (ESG) investments on air pollution and public subjective well-being. Using panel data at the macro level, we employ a difference-in-differences (DID) model, with Chinese provinces and municipalities as units of analysis, to examine the combined effects of the new Environmental Protection Law and changes in corporate ESG investment intensity. The study evaluates their impacts on air quality and public subjective well-being. Findings indicate that these policies and investment behaviors significantly improve public subjective well-being by reducing air pollution. Notably, an increase in ESG investment significantly reduces air pollution levels and is positively associated with enhanced well-being. These results underscore the critical role of environmental legislation and corporate social responsibility in improving public quality of life and provide empirical support for promoting sustainable development in China and beyond.