Who’s swimming naked when the tide goes out? Corporate carbon emissions under climate risk

Using a sample of Chinese A-share listed companies, we investigate the causal relationship between climate risk and corporate carbon emissions with the dual/biased machine learning models. Our findings indicate that in response to climate risk, corporates exhibit a reduction in carbon emissions. Government environmental subsidies, media supervision, and green innovation incentives serve as key channels through which climate risk reduces corporate carbon emissions. The reductions are mainly observed in state-owned enterprises, firms with ample slack resources and risk-aware management, high-emission sectors, and fully competitive industries. Conversely, non-state-owned firms, those lacking slack resources or risk awareness, low-emission industries, and industries with limited market competition exhibit no notable emission decreases. These findings provide micro-level evidence of climate-induced corporate environmental responsibility and offer strategic guidance for carbon mitigation.