This paper will explore a novel tool to improve firm ESG performance by mitigating human capital frictions. Exploiting the Chinese university town construction as an exogenous quasi-natural experiment, this paper explores whether and how higher education agglomeration affects the firm’s ESG performance with the difference-in-differences (DID) method. We find that the higher education agglomeration would improve the firm ESG performance. This effect is more prominent in SOE and high-tech firms. Additionally, the potential channels for improvement in firm ESG performance are that higher education agglomerations would increase human capital and hire more skilled workers. Overall, this paper explores the new contribution to ESG improvement from the higher education agglomeration.