Environmental, social, and governance (ESG) is used to measure the sustainability of firm development. Essentially, the ESG concept requires firms to actively incorporate the interests of various stakeholders into their operating decisions, continuously improve their ESG performance, and gain widespread recognition from numerous stakeholders, thereby providing internal driving force for firms to gain more competitive advantages and achieve high-quality development. In the revised stock listing rules of Shanghai and Shenzhen Stock Exchanges in 2023, it is explicitly required that listed firms should actively practice the concept of sustainable development, actively assume social responsibility, safeguard public interests, and attach importance to ecological environment protection. Against the background of China’s strong promotion of high-quality economic development, the ESG concept coincides with the requirements for firms’ high-quality development. As an indispensable component of China’s market economy system, whether private firms can effectively implement the ESG concept is related to the quality of national economic development. This paper regards state ownership participated in private firms as an important resource and governance mechanism. Using the data of private firms listed in A-shares from 2017 to 2021, it studies the impact of state ownership on corporate ESG performance. The results show that state ownership participation can significantly improve the ESG performance of private firms. In order to clarify the channels in which state ownership participation improves corporate ESG performance, the focus is on the three aspects of E (environment), S (society), and G (governance), which correspond to the public, government, and employees as stakeholders. The mechanism lies in that state ownership participation enhances firms’ environmental investment and tax contribution, and narrows the salary gap between executives and ordinary employees. “CPC’s Party building into Articles of Association” and media attention, as internal and external supervision mechanisms of firms, can significantly strengthen the role of state ownership participation in enhancing the ESG performance of private firms. Further analysis finds that, compared with traditional industries, state ownership participation in private firms in emerging industries can better improve their ESG performance. In addition, state ownership participation in private firms with better ESG performance has a more significant promotion effect on their operational performance. This paper provides a reference basis for government departments to formulate high-quality development policies for private firms.