["Corporate Social Responsibility and Environmental Management, EarlyView. ", "\nABSTRACT\nIn view of China's “dual carbon goals” (carbon neutrality and carbon peaking), the mechanisms and boundary conditions that form the basis of the relationship between corporate environmental, social, and governance (ESG) performance and financial performance have not been adequately explored. Using data on Chinese A‐share listed firms from 2010 to 2024, this study investigates the mediating role of green innovation in the association between corporate ESG performance and financial performance. Then, we examine the impact of corporate ESG practices on financial performance at varying levels of financial risk, adding consideration of financial risk. Our empirical results indicate that good ESG performance significantly enhances financial performance; however, this relationship is moderated by the level of financial risk. Our heterogeneity analysis reveals that non–state‐owned enterprises, firms with high‐quality information disclosure, and small firms benefit more from ESG‐driven green innovation. This study clarifies the pathways and boundaries of ESG‐driven value creation, enriches the literature on sustainable finance, and provides empirical guidance for enterprises engaged in a low‐carbon transition.\n"]