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China's environmental governance exhibits a significant imbalance with its economic development. To enhance the "green" and sustainable practices of enterprises, employing environmental, social, and governance (ESG) principles is imperative. The literature examining the correlation between ESG and green innovation (GI) lacks detailed clarity and obscures the different effects of each dimension. Inefficient resource allocation may also result from ignoring the distinct implementation costs associated with each dimension of ESG. Such problems eventually hinder the guidance of corporate practices. Therefore, the promoting or inhibiting effects stemming from each of these dimensions warrant further study. In this paper, we use data from A‐share listed companies in China for the years 2004 to 2020 to investigate the mechanism that links the E, S, and G dimensions of ESG with GI from an externality perspective. We prove a linear or U‐shaped relationship between the E or S dimension and GI, and we explore the mediating effect of financing constraints on these relationships. We compare these dimensions under a unified theoretical framework to clarify their differences in externality and internality. This study's results highlight the importance for enterprises to emphasise environmental issues and social recognition, instead of just corporate operations, to achieve sustainable development. [ABSTRACT FROM AUTHOR]

A high‐quality green transition is essential to achieving sustainable and coordinated global development. In this paper, a new method of two‐step geometric average is proposed to measure green transition, and a comprehensive framework on the relationship between sustainability and coordination via the propelling force of green transition is constructed at both the national and provincial levels. In addition, the mediating effect model and the threshold model are employed to empirically verify the mechanisms and influences. According to the results, green transition can contribute to regional economic growth at national level and to the coordinated development of regional economies at provincial level in China. Meanwhile, the non‐linear 'U‐shaped' relationships between green transition and regional economy are demonstrated in Asia and the eastern region of China, and spillover effect of technological innovation can indirectly promote regional development. In addition, the heterogeneity effect of green transition fully releases the dividend of economic quality and environmental governance capacity, promoting the coordinated development of regional economies. In the meantime, the driving force of green transition on regional economy is dependent on the external environment, particularly before and after the outbreak of COVID‐19, when its impact has altered substantially. Therefore, it is necessary to promote green transition via greater technological innovation efficiency, and then to restore the vitality of regional economic development; which could provide policy makers and professionals in the regional economy with information for enhancing sustainable and coordinated development. [ABSTRACT FROM AUTHOR]