Unlocking Corporate Decarbonization Through Green Finance: The Mediating Role of Governance and Heterogeneous Responses

Enhancing environmental quality is crucial for attaining sustainable development goals, offering support in conserving Earth’s resources, mitigating pollution, and preserving ecological balance. The study explores the correlation between green financing, corporate governance, and corporate carbon emissions within A-share companies over the timeframe from 2016 to 2021. The results demonstrate a substantial decrease in corporate carbon emissions with the implementation of green financing, and enhancements in corporate governance play an additional role in achieving this reduction. Robustness tests verify the reliability and stability of the conclusions. Analysis of mechanisms indicates that corporate governance acts as an intermediary to some extent in connecting green finance with carbon emissions. Corporate governance facilitates companies in transitioning to sustainability through green finance. In the scenario of inadequate corporate governance, a “masking effect” is observed, reducing the influence of green finance on the carbon emissions of corporations. Heterogeneity study results indicate that small and non-state-owned businesses experience a more pronounced impact from green financing. Drawing on the above findings, the intermediary impact of corporate governance facilitates corporations in achieving green transformations through green financing, which is vital for the sustainable prosperity of businesses.