Beyond compliance: how voluntary environmental certification drives corporate green innovation in China?

Green manufacturing acts as a core driver for advancing the low-carbon transition of development patterns and fostering emerging industrial growth. Drawing on Porter’s hypothesis, this study exploits the Green Factory Certification (GFC) pilot legislation as an external shock to assess its impact on green technology innovation, employing a multi-period propensity score matching difference-in-differences (PSM-DID) approach. Using a sample of Chinese A-share listed firms spanning 2010 to 2023, this study confirms that the GFC strongly promotes corporate green innovation. The paths of influence include increasing media coverage, attracting green investors, and raising managerial environmental awareness. The above finding still holds after multiple rigorous reliability checks. Heterogeneity analysis reveals that policy effects are especially noticeable in State-Owned Enterprises (SOEs), capital-intensive firms, high-tech companies, politically connected entities, and enterprises with non-traditional industrial foundations. Interestingly, while GFC helps enhance corporate value, it has negative spillover effects at the industry level. The study’s conclusions demonstrate how voluntary environmental regulations encourage corporate green innovation, which helps to increase the adoption of sustainable manufacturing practices.