Corporate environmental credit rating and social stability: Evidence from capital-labor conflicts in China's polluting industries

Abstract

Mitigating capital-labor conflicts is essential for maintaining social stability. Using China's Enterprise Environmental Credit Evaluation System (EECES) as a quasi-natural experiment, this study examines the impact of corporate environmental credit rating on capital-labor conflicts. The results indicate that EECES reduces capital-labor conflicts in polluting industries by approximately 17.63%, although its effect weakens over time. Channel tests show that EECES mitigates capital-labor conflicts by reducing workers' pollution exposure risk, improving corporate environmental information transparency, and enhancing social trust in corporations. Moreover, in cities with weaker social governance capacity, EECES exerts a stronger restraining effect on capital-labor conflicts, suggesting that it effectively compensates for deficiencies in social governance. Further analysis reveals that although EECES reduces industrial output, it significantly promotes economic transformation. Overall, these findings highlight EECES as an effective policy tool for safeguarding social stability.