The game of sustainable development driven by policy: the impact of environmental tax on the evolution of corporate ESG strategies

This paper constructs a three-party evolutionary game model involving ‘government-polluting enterprises-the public’ to depict the dynamic strategic interaction among the three sectors under institutional incentives and external supervision. Using panel data from A-share listed companies between 2014 and 2022, we employ a difference-in-differences (DID) model to examine the impact of the environmental tax policy on ESG performance among polluting firms. Empirical results show that environmental tax policies significantly enhance the ESG performance of polluting enterprises. Mechanism tests reveal that at the government level, environmental taxes increase the attention paid by local governments to environmental issues; at the public level, the policies enhance the frequency of environmental information dissemination and the intensity of social supervision; at the enterprise level, the policies prompt enterprises to increase environmental expenditures and green mergers and acquisitions, forming a green transformation path of tripartite linkage among ‘governmental institutional constraints-public social supervision-corporate strategic adjustments’. This study extends the micro-level mechanism of environmental taxation, incorporates the government, enterprises, and the public into a tripartite game-theoretic framework, and reveals the logic of how institutional incentives and social supervision jointly promote corporate sustainable development, providing empirical support for optimizing the environmental tax system and improving green policy design.