The War for Talent Drives Corporate Sustainable Practices: New Talent Policies and Green Innovation

Against the backdrop of intensifying global climate change and escalating competition for talent, we examine corporate sustainability practices in the context of labor market competition. Drawing on a quasi-natural experiment created by new talent policies introduced in Chinese cities since 2017, we find that firms actively adopt green innovation strategies following policy implementation in order to strengthen their competitiveness in the labor market. Moreover, the magnitude of the policy effect shows little sensitivity to variations in incentive intensity across cities. Mechanism analyses reveal two parallel channels: the influx of high-quality labor and government talent subsidies jointly promote corporate green innovation after the introduction of new talent policies. Cross-sectional analyses indicate that the policy effects are more pronounced in high-tech firms, cities with subway systems, and industries characterized by higher levels of competition. In addition, the effects are stronger in eastern regions, cities with higher administrative status, and cities with greater marketization. Notably, the promotional effect of new talent policies is concentrated exclusively in green innovation, with no significant impact on non-green innovation. We further demonstrate that policy-induced green innovation generates tangible environmental benefits, as evidenced by a significant reduction in firms’ carbon emission intensity. Overall, our findings provide important theoretical and empirical foundations for designing synergistic policy frameworks with broader global relevance that integrate talent attraction with green incentives.