Commercializing Green Innovation: The Synergistic Effects of ESG and Market‐Based Environmental Policies

ABSTRACT This study investigates how corporate environmental, social, and governance (ESG) performance shapes the commercialization of green innovations under market‐based environmental regulations (MBERs) in China, a context of heterogeneous policy enforcement and rapid sustainability transitions. While prior research emphasizes green invention, the factors enabling market adoption remain underexplored. We argue that ESG serves as a strategic capability, facilitating commercialization through two complementary channels: signaling legitimacy to partners and enhancing access to preferential financial resources. Using a balanced panel of 403 Chinese A‐share firms (2011–2024), we employ two‐way fixed effects, system GMM, and a staggered difference‐in‐differences design leveraging provincial Green Credit Guideline rollouts. Results show that ESG significantly boosts green innovation commercialization, particularly via the social and environmental pillars. Green credit policies and carbon emissions trading amplify this effect, and their combination yields synergistic complementarities. Findings offer actionable insights for managers, investors, and policymakers aiming to accelerate sustainable technology diffusion.