Green Innovation and ESG Rating Divergence: The Mediating Role of Product Market Competition in Chinese Manufacturing

This study examines the impact of green innovation investment on ESG rating divergence and the mediating role of product market competition, based on 11,768 firm-year observations of Chinese A-share listed manufacturing enterprises from 2011 to 2023. We measure green innovation by lagged green patent applications (distinguishing invention and utility model patents), ESG rating divergence by the standard deviation and range of scores from six mainstream international and domestic agencies, and product market competition using the Herfindahl–Hirschman Index. Using mediating effect models with multi-dimensional fixed effects and heterogeneity analysis, we find that green innovation significantly widens ESG rating divergence, with green invention innovation exerting a stronger impact. Product market competition plays a partial mediating role, as green innovation intensifies industry competition and further amplifies rating divergence. Heterogeneity analysis shows no significant effect for heavily polluting firms, while green invention innovation of high-attention firms is more likely to cause rating disputes. This study reveals the reverse spillover effect of green innovation on ESG evaluation, providing new perspectives for understanding rating divergence and references for corporate green strategies and rating system optimization.