This study examines the impact of China’s new environmental law (NEL, referring to the new Environmental Protection Law implemented in China in 2015, hereafter NEL) on the financial performance (FP) of Chinese A-share companies listed in the heavy pollution industry from 2011 to 2020. Using the DID approach, the study finds that the regulation initially has a negative impact but brings long-term positive results for these companies. It also highlights the impact of the regulation on financing opportunities and R&D investment, with smaller companies facing more significant challenges. Lastly, based on the study’s findings, some policy suggestions are proposed to offer theoretical guidance and policy references for countries to achieve high-quality development.