From Corporate ESG Investment to Regional Sustainable Development in China: A Cross-Level Review of Evidence, Mechanisms, and Boundary Conditions

Abstract

Environmental, social, and governance (ESG) investment is increasingly expected to connect corporate strategy with the United Nations Sustainable Development Goals (SDGs). Yet the Chinese evidence remains dominated by firm-level financial outcomes and individual environmental indicators, leaving unclear whether corporate ESG activity accumulates into measurable regional progress. This article reviews and integrates research on Chinese listed firms to explain the cross-level pathway from corporate ESG investment to provincial environmental, social, and economic outcomes. Drawing on stakeholder theory and sustainable development theory, the review organizes prior work around three questions: what outcomes ESG can influence, through which mechanisms, and under what institutional conditions. The synthesis indicates that ESG is plausibly associated with lower emissions, green innovation, improved resource allocation, and more resilient growth, but the evidence for broader social welfare and regional equality is thinner. Green innovation is the most consistently supported transmission mechanism. State ownership can strengthen policy alignment and resource mobilization, while also increasing the risk of symbolic compliance. In heavy-polluting industries, technological lock-in and transition costs may weaken the conversion of ESG scores into material environmental outcomes. The review therefore proposes a cross-level framework centered on aggregate stakeholder externalities and hierarchical stakeholder salience. It concludes with a research agenda emphasizing multilevel panel designs, outcome-based ESG measurement, policy-shock identification, and explicit tests of spatial spillovers. This perspective helps distinguish substantive sustainability transformation from disclosure-led legitimacy and offers a closer conceptual match between corporate ESG assessment and regional SDG performance