In the markets for the factors of production, enterprises rely on market power to gain competitive advantages, thereby entering a stage of high-quality development or promoting the upgrading of value chain. The paper attempts to explore the regulatory effect of ESG performance in the contest of enterprise market power and the upgrading of value chain, and discuss its potential regulatory mechanism. Two-way fi xed effects model results show that ESG performance plays a certain role in market power on the upgrading of value chain of enterprise，and there is a signifi cant substitutive effect between ESG performance and market power. The results show that ESG performance mainly affects the path of value chain upgrading by obtaining competitive advantages through alleviating financing constraints and reducing supply chain concentration faced by enterprises. At the enterprise level, especially listed companies, they should exert subjective initiative, increase ESG investment, improve ESG performance, and promote the transformation of enterprises from existing competitive paths to new ESG competitive paths; At the policy level, efforts should be made to accelerate the smooth operation of the green fi nancing system to relieve fi nancing constraints, support the strengthening of ESG management in the supply chain, and form a government driven and market driven ESG management system in parallel. This will help enterprises gain more new competitive advantages by improving ESG performance and achieve enterprise upgrading of value chain.