The influence of corporate climate risk disclosure on ESG performance: The moderating role of stakeholder engagement

The impact of climate change is increasing globally, especially in developing countries like China. China faces serious problems such as imperfect regulatory mechanisms and severe environmental challenges. As a result, corporate disclosures on climate risks and environmental, social and governance performance have become a vital issue. This study explores the relationship between climate risk disclosure and Chinese companies' environmental, social and governance performance (ESG performance). This study employed quantitative research methods to construct a quadratic term regression model. It used empirical data from Chinese companies to analyse the relationship between climate risk disclosure and ESG performance. Then, it further explored the impacts of stakeholder engagements, such as the media, investors and government on this relationship. The research results show a significant U-shaped relationship between climate risk disclosure and ESG performance; that is, in the early stage of disclosure, as climate risk disclosure increases, ESG performance will be harmed. However, as disclosure increases and reaches the U-shaped relationship's inflection point (X-point), more disclosure can improve ESG performance, which also means climate risk disclosure will ultimately promote corporate ESG performance. Media attention and investor concern moderate the relationship between climate risk disclosure and ESG performance, but government intervention does not show a significant moderating effect. This study reveals the complex impact of climate risk disclosure on corporate ESG performance and emphasizes the importance of stakeholder engagement in mediating this relationship. Consequently, it enriches the application of legitimacy theory by providing a new perspective for Chinese companies to enhance their ESG performance. Additionally, it serves as a reference for policymakers and corporate governance