Can Carbon Strategy Enhance Corporate Productivity? Evidence From Carbon Risk and Opportunity Management

ABSTRACT Whether corporate carbon management can enhance productive efficiency is central to firms' long‐term competitiveness and determines whether carbon reduction efforts can be sustained beyond regulatory compliance. This study examines how corporate carbon risk and opportunity management affects firm productivity (measured by total factor productivity, TFP) using panel data from Chinese A‐share–listed firms over the period 2017–2021. The results show that carbon risk management is positively associated with firm productivity. Mechanism analyses indicate that this effect operates through improved technological innovation and more efficient resource allocation. In contrast, carbon opportunity management does not exhibit a statistically significant independent effect on TFP. However, trade exposure positively moderates the relationship between carbon opportunity management and productivity, suggesting that opportunity‐oriented carbon strategies are more likely to translate into productivity gains in firms with greater exposure to international markets. This study contributes to the literature by providing systematic evidence on how different dimensions of corporate carbon management relate to firm productivity and by highlighting the role of external market exposure in shaping the effectiveness of carbon strategies. The findings offer practical implications for corporate managers, policymakers, and Environmental, Social, and Governance–oriented investors seeking to align carbon management with long‐term competitiveness and productivity growth.