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Effect of low-carbon innovation on carbon risk: International firm-level investigation

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  • Han, Liyan
  • Xie, Chen
  • Jin, Jiayu
  • Zhao, Yang

Abstract

In our study, leveraging a comprehensive dataset spanning 25 economies from 2007 to 2020, we demonstrate the role of low-carbon innovation in mitigating carbon risk by diminishing both the total emissions and emission intensity of firms. Overall, our findings highlight the profound influence of low-carbon innovation in curtailing carbon emissions. Remarkably, compared to advanced economies, emerging ones exhibit a more pronounced trend in the benefits of low-carbon innovation. Our analysis also underscores the pivotal role of the Paris Climate Agreement in amplifying the impact of low-carbon innovation, an effect that became especially salient during the 2008 financial crisis. Furthermore, we identify a discernible mediating role of energy consumption and intensity in the nexus between low-carbon innovation and carbon risk reduction. We also elucidate the heterogeneous effects of low-carbon innovation across different industries.

Suggested Citation

  • Han, Liyan & Xie, Chen & Jin, Jiayu & Zhao, Yang, 2023. "Effect of low-carbon innovation on carbon risk: International firm-level investigation," International Review of Financial Analysis, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finana:v:90:y:2023:i:c:s1057521923004283
    DOI: 10.1016/j.irfa.2023.102912
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