A Study on the Relationship Between Top Management Team Political Connections and Corporate Environmental, Social and Governance (ESG) Strategy Formulation: A Political Economy Analysis Based on the Context of China and the WTO

Abstract

This study examines how top management team politics affect firm environmental, social and governance (ESG) strategies in China's WTO-shaped regulatory and economic environment. This study uses a quantitative research method to examine 2,150 A-share listed Chinese firms' ESG ratings, and governance disclosures from 2013 to 2022 in various non-financial sectors. A comprehensive study of political relationships' impact on ESG initiatives uses multiple regression models. The findings of research suggest that politics positively affect ESG performance, suggesting that politically connected corporations may embrace more ESG practices due to greater laws and government aims. Strong corporate governance procedures including board independence, openness, and accountability oversight and enforcement prevent symbolic. Environmental innovation increases the effect of political connections on ESG performance, and companies that invest in green technologies meet regulatory standards and acquire a competitive edge by fulfilling global environmental norms and appealing to global stakeholders. This analysis supports political economics and corporate governance theories by showing that political relationships alone cannot deliver significant ESG performance without strong governance institutions and innovative environmental practices. Political links affect sustainable firm strategy through corporate governance and green innovation, according to the findings. The study also boosts sustainable development in politically affected economies by showing that good governance frameworks can leverage political relationships to accomplish national policy goals and international standards, aligning enterprises with WTO expectations. This greatly impacts business and politics. By optimising ESG outcomes through governance improvements, green innovation, and political ties, corporate executives can enhance their reputation, fulfill legal duties, and meet market demands for sustainable practices.