Fundamental principles of agency theory and incentive mechanisms suggest that executive compensation should align with a company’s developmental goals. This paper aims to explore whether the executive compensation of listed companies in the Chinese capital market aligns with their ESG (Environmental, Social, and Governance) practices, and the underlying mechanisms of this influence. For the first time, this study integrates ESG practices with executive compensation, creating a novel analytical framework and filling a gap in the existing literature. Employing empirical research methods such as the PSM-DID (Propensity Score Matching – Difference-in-differences) model, fixed effects model, heterogeneity analysis, and tests for mediating effects, the study concludes that ESG practices of Chinese listed companies significantly increase executive compensation, demonstrating consistency between the two. Additionally, the beneficial impact of ESG practices on executive compensation incentives is more pronounced in state-owned enterprises compared to non-state-owned ones. Financial performance, company reputation, and investor relations partially mediate the relationship between a company’s ESG practices and executive compensation. Specifically, financial performance acts as a negative mediator, while company reputation and investor relations serve as positive mediators. Initially, participation in ESG practices tends to exacerbate ‘income inequality’ between executives and other employees. However, as companies continue to enhance their ESG practice levels, this ‘income inequality’ gradually diminishes. Finally, the paper offers several suggestions: Firstly, Chinese listed companies can attract and retain top executive talents by strengthening ESG practices. Although initial ESG practices may lead to pay imbalances, long-term involvement will help reduce this disparity. Secondly, investors can conduct a more comprehensive assessment of a company’s future performance, governance structure, and corporate social responsibility by analyzing how ESG practices are reflected in executive compensation. Lastly, the paper provides valuable insights for policymakers, suggesting that regulators should develop more targeted policies and guidelines based on the relationship between a company’s ESG practices and executive compensation.

Brand value is a strategic intangible asset that strengthens firms’ competitiveness and supports sustainable growth. This study examines the association between corporate environmental, social, and governance (ESG) performance and brand value using 8170 firm-year observations from Chinese A-share-listed companies during 2020–2024. Results show that ESG performance is positively and significantly associated with brand value. Mechanism analysis further indicates that innovation investment, proxied by annual firm-level R&D expenditure (INNO), mediates this association in the primary specification. The indirect effect remains positive when log-transformed R&D expenditure is used, whereas R&D intensity does not support the mediation effect. From a nonlinear perspective, the full-sample analysis identifies a significant single threshold in R&D expenditure, above which the ESG coefficient is significantly larger. Industry-level analyses show the same single-threshold pattern in both high-tech and traditional firms. Because R&D expenditure measures innovation input rather than realized innovation output, the estimated thresholds are interpreted as sample-specific empirical breakpoints rather than universal or optimal R&D-investment targets.