Abstract
The task of reducing carbon emission intensity is difficult for manufacturing firms in China under the national goal of "carbon peaking and carbon neutrality". Numerous studies have confirmed the inhibitory impact of ESG performance on carbon emission intensity; nevertheless, the significance of ESG rating divergence as a derivative of ESG ratings has been neglected. Therefore, this study selects Chinese A-share listed manufacturing firms from 2011-2022 as a research sample and empirically examines the impact of ESG rating divergence on the carbon emission intensity of Chinese manufacturing firms via a higher-order fixed effects model. The study revealed that (1) ESG rating divergence creates disincentives for manufacturing firms to increase carbon emission intensity; (2) ESG rating divergence leads to an increase in corporate carbon emissions by inhibiting incentives for green innovation; and (3) mitigating financial constraints and enhancing digital transformation in enterprises diminishes the impact of ESG rating divergence on the carbon emissions of manufacturing firms. Furthermore, enterprise digital transformation can exert a moderating influence on both the initial and subsequent stages of the "ESG performance[Formula: see text]green innovation[Formula: see text]carbon emission intensity" pathway, predominantly in the initial phase. (4) The impact of ESG rating divergence on carbon emission intensity varies depending on the ownership, industry, geography, and level of competitiveness of manufacturing enterprises. The findings not only provide empirical evidence on the feasibility of expanding the standardization of ESG ratings within China's regulatory framework but also provide useful inspiration for Chinese firms to reduce their carbon emission intensity and achieve sustainable development.