Central European Business Review X:X

Impact of Carbon Emissions as Anti-ESG Factor on the Performance of Financial Markets in China

Monika Matušovičová, Sandra Matušovičová

University of Economics in Bratislava, Faculty of Commerce

The article researches the impact of anti-ESG factors on financial markets in China and its consequences for the countries of Central Europe. In this connection, the specific aim of the article was to analyze whether CO₂ emissions, as the main factor against ESG concept, negatively affect the return of stock and bond investments in the extreme environment of the world's largest producer of emissions - China. The multiple linear regression (MLR) model method was used for explaining the investment return according to Khan’s and Long’s model specification, applied on annual data for investment horizon from 1991 to 2023. The results at the 5% level of significance (p < 0.05) surprisingly showed that emissions have a positive impact on Chinese stock prices (β = 0.079). This reflects that instead of environmental goals stock investors in China rather have a preference for economic growth, for which China's emission-intensive industry is crucial. On the other hand, ESG-related issues have a slightly negative impact on bonds (β = -0.031), which emphasizes the greater importance of environmental factors for fixed income investments. Overall, the research offers valuable insights into the complex relationship between CO₂ emissions, investment performance and investor sentiment in China, which may have significant implications for other countries subject to strict ESG regulations, as well as the potential to use ESG strategies to increase the attractiveness of their financial markets.

Implications for Central European audience: Understanding the impact of CO₂ emissions on Chinese financial markets, holds significant implications also for Central European countries, as ESG is at the forefront of EU regulatory framework. Particularly within the Visegrad 4 (V4) alliance, where industrial production in sectors like car manufacturing plays a crucial role in economy, finding a balance between economic growth and environmental responsibility is paramount. The article therefore implies that by integrating ESG in investment strategies, Central European countries can possibly enhance the attractiveness of their currently passive financial markets. At the same time the findings help societies as a whole, by emphasizing the financial benefits of building a more sustainable future.

Keywords: green finance; ESG investment; carbon management

Received: November 17, 2024; Revised: June 27, 2025; Accepted: August 19, 2025; Prepublished online: February 7, 2026