We investigate the impact of public climate concerns on corporate ESG performance and find a negative association between the two variables. Our mechanistic analysis suggests that public climate concern increases firm risk, which explains the negative effect of ESG performance. This negative effect is exacerbated by inefficient corporate investments and mitigated by increased local social trust. Furthermore, the negative relationship between climate attention and ESG performance is more pronounced for companies with weak CEO hometown identify, high resource acquisition costs, non-heavy polluting industries and in the colder northern regions of China. The findings highlight the need to address the challenging impact of climate attention on corporate sustainable performance by enhancing regional social trust and CEOs' sense of belonging.

This paper measures the “greenium” in China’s stock markets with data during 2011-2020. We find that the green stocks outperform the brown ones in China and public climate concern brings the greenium. Based on the phenomenon, with panel regression, we furtherly figure out that the firms’ stock returns are positively correlated with their ESG rating, and public climate concern strengthens the relationship, which suggests that China’s stock investors behavioral bias contributes to greenium.