Climate finance guidance and corporate investment response: Evidence from China

Bridging the massive funding gap for climate action remains a critical global challenge. While existing literature extensively explores broad green finance, climate investment presents distinct risk-return profiles and global externalities that necessitate targeted institutional frameworks. Treating China’s climate investment and financing pilot policy as a quasi-natural experiment, this study investigates its micro-level impact on corporate climate-friendly investment. Utilizing a sample of Chinese A-share listed companies from 2015 to 2023, we employ a novel BERT-based algorithm to precisely measure firm-level climate investments and utilize the DID model for causal identification. The empirical results demonstrate that the policy significantly enhances corporate climate-friendly investment. Operating within China's unique institutional context, this enhancement is driven by a dual mechanism: an administrative signaling effect that awakens corporate climate awareness, and a market-streamlining effect that alleviates internal funding constraints. Heterogeneity analyses reveal that the policy’s efficacy is amplified for firms located in regions with developed green finance and those facing higher government and investor climate attention. Furthermore, the policy stimulates substantive climate governance performance without exacerbating "greenwashing" risks. By explicitly unbundling climate finance from generalized green finance, this study extends institutional and resource dependence theories in emerging markets, providing robust empirical evidence and actionable insights for global climate governance.