From risk to opportunity: can climate risk promote green innovation in China’s A-share firms?

This is the authors' abstract. We don't add key points for this paper.

Green innovation drives economic growth, facilitates the transition to sustainability, and strengthens enterprises against potential climate-related disruptions. However, the relationship between firm-level climate risks and corporate green innovation has been insufficiently explored. This study conducts a textual analysis of the annual reports and corporate social responsibility (CSR) reports of Chinese A-share listed firms to develop indicators for assessing firm-level climate risks. It examines the impact of climate risks on corporate green innovation. The results reveal that firms tend to intensify their green innovation efforts in response to escalating climate risks, particularly in substantive green innovation. Furthermore, the positive correlation between firm-level climate risks and green innovation is more pronounced and significant for firms in highly polluting and high-tech industries. These insights shed light on the influence of corporate climate risk on green innovation. Additionally, our research provides theoretical insights and practical recommendations for policymakers seeking to design targeted strategies that promote and support green innovation across various sectors.