The Double-Edged Sword: How Does Corporate ESG Responsibility Fulfillment Shape Cost Stickiness?

Fulfilling corporate ESG responsibilities enhances a firm’s sustainable development capabilities but also comes at an economic cost. This study investigates whether firms should invest heavily in ESG or maintain moderate ESG practices to balance cost efficiency and resilience. Using a sample of A-share listed companies in China from 2012 to 2024, we employ OLS regression models to explore the impact of ESG responsibility fulfillment on cost stickiness and the factors that influence this relationship. The study finds that (1) there is an inverted U-shaped relationship between corporate ESG responsibility fulfillment and cost stickiness; (2) the turning point lies between the B and CCC Huazheng ESG rating levels. Below this level, ESG responsibility fulfillment reduces cost stickiness, while above it, excessive ESG fulfillment increases cost stickiness; (3) environmental sensitivity, managerial overconfidence, and state ownership amplify this non-linear effect, making the reduction or increase in cost stickiness more pronounced. This paper deepens the understanding of the drivers of cost stickiness from the perspective of ESG responsibility fulfillment, offering new insights for future research on cost behavior and providing valuable guidance for firms seeking to optimize cost management through ESG strategies.