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Climate finance plays a pivotal role in directing increased capital flow toward climate change mitigation and adaptation activities. Many emerging enterprises have grown rapidly under the influence of climate finance policies, contributing to urban low-carbon transition. Therefore, it is important to explore the interrelationships between climate finance, enterprise low-carbon transformations, and urban carbon emission efficiency. This study delves into the impact of climate finance on urban carbon emission efficiency and its underlying transmission mechanisms, drawing upon comprehensive panel data of 262 Chinese cities and 4125 enterprises from 2009 to 2019. The findings indicate that urban climate finance have significantly positive influences on urban carbon emission efficiency and unveil that enterprise environmental, social and governance (ESG) performance exhibits positive influences on urban carbon emission efficiency, underscoring the critical role of enterprises as the vanguard of climate finance. Moreover, the research presents the mediating effect of enterprise green innovation between the urban climate finance and carbon emission efficiency. The mediating effect manifests distinct threshold effects among different levels of enterprise green innovation. Our results suggest that China should enact tailored climate finance policies for higher urban emission efficiency, including judicious allocation of climate funds and effective guidance on enterprise-driven green technological innovation.
Liu et al. (Thu,) studied this question.