The diffusion effect of environmental policies on the improvement of ESG behavior of new energy enterprises based on prospect theory: From the perspective of complex network game

School of Management, Wuhan University of Technology, Wuhan, Hubei 430070, China

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Abstract

The ESG concept is a key benchmark for balancing corporate social responsibility with economic benefits. Although some companies claim to take ESG seriously, there have been no substantial improvements in practice. This study explores the actual effects of government tax incentives and environmental regulations on the ESG behavior of corporate entities. The complex network game theory and prospect theory are used to build a network game model for the promotion and diffusion of ESG behavior within enterprises, and the enhancement and diffusion of ESG behavior among new energy enterprises are compared and analyzed by Matlab simulation. The results show that tax incentives significantly promote the spread of improved ESG behavior across corporate networks. However, when environmental regulation is strengthened at the same time as tax incentives, firms face higher improvement costs, leading to a decline in the proportion of enhanced ESG behaviour. Policies that combine tax incentives and environmental regulation can be more effective in driving substantial improvements in corporate ESG behavior.