<p>With the global push for green sustainable development, ESG (environmental, social, and governance) factors become crucial in corporate strategic decision-making. This study constructs a business-level climate risk index utilizing text analysis and machine learning techniques, using a sample of Chinese listed companies from 2009 to 2022, to investigate the effects of climate risks on corporate ESG performance. The findings show that climate risks significantly improve corporate ESG performance, with robustness confirmed through various robustness checks and endogeneity tests. Mechanism analysis reveals that climate risks can enhance ESG performance by improving green innovation, increasing environmental risk perception, and driving business diversification. Further analysis shows that higher social trust, stronger organizational resilience, and uncertainty in climate policy positively moderate the effect of climate risks on ESG performance. Heterogeneity analysis finds that climate transition risks have a significant positive relationship with ESG performance; the impact of climate risk on corporate ESG performance is more pronounced in non-state-owned enterprises, companies with executive teams having academic backgrounds, firms with lower regulatory pressure, and non-energy companies. This research contributes to understanding the relationship between environmental risk and corporate sustainable transformation, offering new insights into ESG performance in the context of climate risk.</p>