Nonlinear Effects of Environmental Costs on Dual Performance of Enterprises and Credit Regulation Mechanism: A Dynamic Empirical Study Based on Chinese Heavily Polluting Enterprises

This study examines the impact of environmental costs on corporate performance from the dual perspectives of economic and environmental outcomes, using a sample of 569 listed companies in China’s heavily polluting industries from 2013 to 2022. It also explores the moderating role of green credit in this relationship. The research results indicate that: (1) There is a significant U -shaped relationship between environmental costs and corporate economic performance. Meanwhile, a robust positive linear association exists between environmental costs and corporate environmental performance. (2) Further analysis reveals that ex-ante preventive environmental costs contribute more significantly to economic performance, whereas end-of-pipe treatment costs are more conducive to improving environmental performance. (3) Green credit exerts a nonlinear moderating effect between environmental costs and economic performance, but shows a positive moderating role in the context of environmental performance. (4) Mediation tests confirm that green technology innovation serves as a key pathway through which environmental costs affect corporate performance. (5) Heterogeneity analysis indicates that the moderating effect of green credit is more pronounced in regions with stringent environmental regulations and in state-owned enterprises. These findings provide empirical support for optimizing corporate environmental investment structures and implementing differentiated green finance policies.