Demand Meets Supply: The ESG Impact of Green Procurement and Green Subsidy

Drawing on China's policy practices under the “dual carbon” goal, this study examines how green procurement (GP), a demand-side policy, and green subsidies (GS), a supply-side policy, jointly affect corporate ESG performance. Using panel data of A-share listed industrial firms from 2015 to 2022 and a two-way fixed effects model, the findings show: (1) the GP–GS policy mix significantly enhances ESG performance through complementary “market-locking” and “resource-matching” effects; (2) mechanism analysis identifies three channels—greater information transparency, stronger market competition, and higher green innovation; and (3) heterogeneity tests reveal stronger impacts among heavily polluting firms and in regions with robust institutional environments. By moving beyond single-policy analyses, this study provides evidence on the synergistic optimization of demand- and supply-side environmental policies and offers micro-level insights to refine China's green governance toolkit and strengthen ESG drivers.