Harmony or Hypocrisy? Confucian Culture as a Regulator of ESG Decoupling

Abstract

This paper analyzes a sample of Chinese listed companies from 2011 to 2022 to explore the influence of Confucian culture on corporate ESG decoupling. The findings demonstrate that Confucian culture reduces corporate ESG decoupling. Mechanism analysis reveals that Confucian culture primarily lowers corporate ESG decoupling by enhancing the quality of corporate information disclosure, mitigating managerial self-interest, and strengthening regional social trust. Moreover, this relationship is more pronounced in companies less influenced by external cultural shocks and those operating within weaker formal institutional frameworks. The study highlights that Confucian culture, as an alternative mechanism to explicit norms and formal systems, plays a crucial role in regulating corporate ESG decoupling and fostering ESG practices. This study not only contributes to the literature on the role of informal institutions in corporate ESG decoupling but also deepens the theoretical understanding of the positive impact of Confucian culture at the corporate level.

Keywords: ESG decoupling, informal institutions, Confucian culture, ESG practices