Enhancing the corporate social & environmental responsibility of Chinese energy enterprises: A view from the role of management compensation incentive

Energy enterprises are critical for national energy security and economic development but face scrutiny for environmental harms from resource over-exploitation and pollution. Using panel data on Chinese energy enterprises (2010–2021) and instrumental-variable estimation, this study examines the causal effects of management compensation incentives on corporate social responsibility (CSR) and corporate environmental responsibility (CER). Results show management salary incentives significantly promote CSR and CER, while higher management shareholding reduces CSR and CER activities. Effects differ by industry and ownership: the negative impact of equity incentives is more pronounced in the electricity and environmental industry, and salary incentives have a stronger positive effect on CSR in state-owned enterprises. The findings suggest firms should emphasize salary incentives and appropriately reduce managerial shareholding, and that government should support state-owned energy enterprises and limit managerial shareholding via policy and complementary incentive systems.

Jiaxin He, Jingyi Li, Xing Chen