Will the practice of ESG by enterprises exacerbate bankruptcy risks due to resource occupation, resulting in factual outcomes that directly contradict ESG's original concept of sustainable development? In this regard, Chinese A-share listed companies was taken as the research object and conducts empirical testing. Based on the widely studied relationship between ESG and corporate returns, it further balances the risks and benefits brought by improving ESG to enterprises from the perspective of bankruptcy risk. Research has found that improving ESG performance of enterprises can reduce agency costs, alleviate financing constraints, and effectively alleviate bankruptcy risks. And this effect is more evident in private enterprises, enterprises with high executive shareholding ratios and high degree of marketization in their locations. Higher ESG rating fluctuations will reduce the original bankruptcy risk reduction effect of ESG performance, reflecting the obvious instability of ESG ratings, which will weaken the effect of improving ESG performance by releasing positive information to the market and winning the support of stakeholders. It suggests that enterprises actively implement the ESG concept, the government accelerates the progress of improving the ESG related information disclosure system for enterprises, and the public provides more support and attention to enterprises that actively undertake social responsibility, aiming to help form a harmonious and stable social environment and promote enterprises to practice the ESG concept.