Firms’ attention to physical climate risks arising from extreme weather events and long-term climate change has become a crucial strategic orientation that shapes how firms perceive, interpret, and respond to climate-related uncertainties. However, despite growing scholarly interest in climate risk and corporate sustainability, limited research has systematically examined whether and how firms’ climate risk attention (CRA) translates into value chain upgrading (VCU). Using panel data on Chinese A-share listed companies from 2008 to 2024, this study investigates the relationship between CRA and VCU. The empirical results show that CRA significantly promotes firms’ VCU, and that this effect is more evident among firms in climate-sensitive industries. Mechanism analyses further reveal that CRA facilitates firms’ embedding into green R&D networks, green investor networks, and green governance networks, which in turn enhance VCU. Further analyses indicate that green governance capability, green subsidies, and green outcome transformation ability strengthen the positive effect of CRA on VCU. These findings deepen the understanding of how climate-related strategic attention shapes firms’ sustainable transformation and provide evidence that proactive attention to physical climate risks not only improves environmental governance, but also serves as an important catalyst for firms to move toward higher value-added segments of the value chain.
Tong et al. (2026) studied this question.