A Systemic Analysis of How Economic Policy Uncertainty Affects Corporate Green Innovation: The Interdependent Role of ESG Management Systems in China

This study adopts a systems perspective to examine how economic policy uncertainty (EPU) affects corporate green innovation (GN) amid China’s ongoing economic transformation. Using firm-level data from Chinese A-share listed companies from 2015 to 2022, we find that EPU is negatively associated with firms’ GN investment. This relationship is significant at the 10% level in the baseline model and remains negative in the robustness tests. The formal moderation results further show that higher environmental, social, and governance (ESG) performance strengthens the negative association between EPU and GN. The results for government subsidies and political connections are more limited. The subgroup regressions show directional patterns, but the formal interaction and between-group tests do not confirm statistically significant moderating effects for either variable. From a policy perspective, the findings suggest that reducing uncertainty in green innovation requires more stable policy expectations, clearer ESG requirements, and more predictable financial support mechanisms. Overall, this study shows how policy uncertainty and internal governance arrangements jointly shape firms’ green innovation decisions in China.