Abstract: Using A-share listed companies in Shanghai and Shenzhen from 2013 to 2022 as the sample, the impact mechanism of corporate ESG practices on their market power was empirically examined. The mediating role of sustainable business model innovation was investigated, along with the moderating effects of property rights nature and industry environmental sensitivity heterogeneity. The results indicate that overall corporate ESG practices, as well as their individual dimensions (environmental, social, and governance), significantly enhance market power. Sustainable business model innovation is found to play a partial mediating role in this relationship. Specifically, the mediating paths for environmental practices and corporate governance practices are significant, whereas the mediating effect of social practices is not statistically confirmed. Further heterogeneity analysis reveals that the positive effect of ESG practices on market power is more pronounced in non-state-owned enterprises and in industries characterized by low environmental sensitivity. Based on these findings, practical implications are provided for relevant stakeholders: Governments should strengthen the dissemination of ESG concepts and refine differentiated incentive and tracking mechanisms. Enterprises need to deeply integrate ESG practices, focusing on sustainable business model innovation particularly in the environmental and governance dimensions, to foster deeper alignment between ESG and industrial development. Investors are advised to prioritize the allocation of assets with superior ESG performance, consumers should embrace green consumption, and the media ought to enhance publicity and oversight—all contributing to a collaborative effort in building an external ecosystem that supports ESG practices.This study not only elucidates the internal logic and boundary conditions under which ESG practices affect corporate market power, offering fresh empirical evidence for understanding the ESG value-creation mechanism, but also provides targeted insights for policymakers to optimize relevant incentive mechanisms, for enterprises to advance the integration of ESG with sustainable business model innovation, and for stakeholders to collectively cultivate an ESG-supportive ecosystem.