Correctly grasping the dialectical relationship between efficiency and equity serves as a robust pillar for advancing the Chinese path to modernization, while the organic integration of ESG principles into corporate development strategies offers critical guidance for enterprises to navigate the efficiency-equity dynamic. As both ESG performance and financial outcomes are endogenous outcome variables of corporate decision-making, their inherent endogeneity obscures the behavioral adjustments and goal prioritization of enterprises when implementing ESG principles. Exogenously determined third-party ESG ratings provide an ideal setting to identify corporate behavioral choices and value preferences in ESG practice. Against this backdrop, investigating corporate adaptive behaviors under ESG ratings and their trade-offs between efficiency and equity not only helps clarify the behavioral logic of enterprises in balancing these dual objectives, but also help address the effectiveness of ESG principles in practice.

Using data from China’s A-share listed companies from 2011 to 2019, this paper analyzes how ESG ratings affect employment changes, hiring efficiency, and wage distribution inequity, while revealing corporate preferences for efficiency or equity during strategic adjustments. The results show that ESG ratings reduce net employment growth but improve hiring efficiency, while exacerbating wage distribution inequity. Path analysis reveals that while ESG ratings contribute to a contraction in corporate employment growth rates by reducing job creation paths, they simultaneously improve hiring efficiency through the dual mechanisms of curbing over-hiring and alleviating under-staffing. The core logic behind ESG ratings exacerbating wage inequality lies in their dual effects: While driving increases in both executive compensation and general employee wages, they disproportionately amplify the issue of excessive executive pay. Further analysis identifies market pressure and supervisory effects as the key drivers of employment and wage adjustments. Contextual analysis from the efficiency-equity perspective demonstrates that corporate decision-making driven by ESG ratings leans toward efficiency. Additionally, ESG ratings promote capital-labor ratio growth and labor skill structure upgrading.

Theoretically, this paper enriches the ESG ratings research; practically, it provides empirical evidence for balancing efficiency and equity at the firm level, shedding light on corporate adaptive behaviors under external supervision.