The Mediating and Suppression Effects of Financing Costs: 
The Impact of ESG Performance on Green Innovation

Tao Hu; Hongxiao Yin

doi:10.70711/frim.v4i6.9674

The Mediating and Suppression Effects of Financing Costs: The Impact of ESG Performance on Green Innovation

Tao Hu, Hongxiao Yin

Abstract

Against China's dual carbon goals, green transformation of high?energy?consuming manufacturing is critical to high?quality economic development. Using 2018-2024 A?share listed firm data from this sector, we employ two?way fixed?effects and mediation models to
examine ESG environmental performance's impact on green innovation and its transmission mechanism. Results show: (1) ESG significantly
reduces financing costs; (2) lower financing costs strongly promote green innovation; (3) a significant 5% indirect effect coexists with an insignificant total effect, revealing a suppression effect - ESG positively affects green innovation via lower financing costs, but this is offset by a
negative direct effect. These findings clarify ESG's complex mechanism and provide evidence for optimizing green finance policies and industrial transformation.

Keywords

ESG performance; Financing costs; Green technology innovation; Mediation effect; Suppression effect

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DOI: http://dx.doi.org/10.70711/frim.v4i6.9674

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