Abstract
Amid shifts in the global economy and the rise of sustainable development, understanding how firms' ESG (Environmental, Social, Governance) performance shapes outward foreign direct investment (OFDI) is increasingly critical. Using panel data on Chinese listed companies from 2009–2022, this paper examines ESG's impact on OFDI, focusing on the moderating role of international monetary policy, proxied by the U.S. Federal Reserve's stance. Results show that ESG performance significantly promotes OFDI, with monetary tightening amplifying, and monetary easing dampening this effect. The mechanism operates through enhanced internal and external financing capacity and reduced risk-taking. Environmental scores primarily drive decision effects, while environmental and governance scores jointly influence investment scale. The moderating role is stronger for non-state-owned enterprises, greenfield investments, and non-heavy-polluting firms. The findings offer new evidence from a major emerging market, guiding firms' counter-cyclical investment strategies and informing policies to align ESG, finance, and international expansion.