Abstract
The Environmental Cooperation System (ECS) is a new exploration of the government's spatial environmental policy to meet the requirements of green and sustainable development, so it is very important to scientifically evaluate its green innovation effect. Based on China's A-share listed companies from 2006 to 2021, from the perspective of corporate ESG performance, we apply the multi-dimensional fixed-effects difference-in-differences (DID) model, and empirically test the impact, mechanism, and heterogeneity of the Environmental Cooperation System of Shenzhen-Dongguan-Huizhou Metropolis (ECS-SDHM) on corporate green innovation. It found that ECS-SDHM can significantly improve corporate green innovation, and the policy effect is more significant in the private enterprise group. Secondly, we use ESG rating score and decomposition indicators to deeply analyze the green innovation effect mechanism of ECS-SDHM from the perspective of ESG performance. The results show that ECS-SDHM can enhance corporate green innovation by significantly improving corporate ESG performance, environmental governance, and social governance. Further research found that both corporate environmental social responsibility and executives' overseas backgrounds can positively moderate the green innovation effect of ECS-SDHM by positively moderating the ESG performance mechanism.