The impact of green funds on the carbon emission intensity of listed companies

Background As the global climate change crisis intensifies, advancing the low-carbon transition has become a core strategy for sustainable development. Green finance is increasingly a key driver of corporate pollution reduction and carbon mitigation, yet how equity-based green funds shape corporate carbon emission intensity remains underexplored. Objective This paper investigates the impact of green fund shareholdings on the carbon emission intensity of listed companies, and examines the underlying mechanisms, heterogeneity and boundary conditions. Methods Using data from China’s A-share listed firms over 2010-2022 (3,299 firms; 17,943 firm-year observations) sourced from the CSMAR database, we employ firm and industry-by-year fixed-effects regressions, a battery of robustness checks, instrumental-variable (2SLS) and lagged-variable endogeneity treatments, as well as heterogeneity and mechanism analyses. Results Green funds significantly reduce corporate carbon emission intensity, a finding that remains robust after a series of alternative measures and endogeneity treatments. Heterogeneity analysis reveals that this emission-reduction effect is more pronounced among firms in non-heavily polluting industries, regions with stringent environmental regulations, growth-stage enterprises, and industries with low concentration. Mechanism analysis suggests that green funds curb carbon emission intensity primarily by promoting green innovation, alleviating financing constraints, fulfilling ESG responsibilities, enhancing corporate reputation, and driving biased technological progress. Furthermore, digital technologies, managers’ educational backgrounds, and the adoption of artificial intelligence play positive moderating roles. Conclusion This study provides empirical evidence on how green financial instruments drive micro-level low-carbon transitions and offers policy insights for optimising green fund allocations.