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The Response of Corporate Innovation to Climate Policy Uncertainty: Evidence from China

Author

Listed:
  • Ning Zhu

    (Business School, Central South University, Changsha 410083, Hunan, P. R. China)

  • Xiao Zhang

    (Business School, Central South University, Changsha 410083, Hunan, P. R. China)

  • Xiaohang Ren

    (Business School, Central South University, Changsha 410083, Hunan, P. R. China)

  • Lan Wang

    (��Fashion Business School, University Arts of London, WC1V 7EY, London, United Kingdom)

Abstract

As the climate change risks’ effects on social development increase, how to deal with these challenges has become extremely urgent, and it is necessary for companies to adapt to the changing circumstances. This paper estimates the impact of climate policy uncertainty on corporate innovation using unbalanced panel data with 2,449 listed companies from 2009 to 2020. The findings show a significant positive correlation between climate policy uncertainty and corporate innovation investment. Specially, two possible mechanisms are explored. Government environmental regulations force companies to produce cleanly. Optimistic market expectations encourage firms to shift to a green development model. Further, the renewable energy industry and state-owned enterprises’ powers of innovation are more robust. Jointly, our findings offer the government a clear direction for policy making by identifying the effects of climate policy uncertainty on corporate innovation.

Suggested Citation

  • Ning Zhu & Xiao Zhang & Xiaohang Ren & Lan Wang, 2023. "The Response of Corporate Innovation to Climate Policy Uncertainty: Evidence from China," Journal of Environmental Assessment Policy and Management (JEAPM), World Scientific Publishing Co. Pte. Ltd., vol. 25(02), pages 1-29, June.
    • Handle: RePEc:wsi:jeapmx:v:25:y:2023:i:02:n:s1464333223500084
    DOI: 10.1142/S1464333223500084
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