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Green innovation in a warming climate: Substantive commitment or strategic response?

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  • Du, Qunyang
  • Bao, Liner
  • Li, Zhongyuan
  • Xu, Zheyu

Abstract

Rising global temperatures impose a new form of physical and regulatory risk on firms, with direct consequences for innovation choice. We study how high temperatures influence corporate green innovation by using data on Chinese listed firms matched with regional temperature records from 2001 to 2022. We report three findings. First, more high-temperature days increase green innovation activities, with a larger effect on strategic than on substantive innovation. Second, firms respond to high temperatures through three key mechanisms: reduced asset structure inertia, heightened public scrutiny, and diminished operational resilience. Third, green innovation under high-temperature conditions improves access to finance, raises corporate reputation, and attracts larger government subsidies. These benefits are more pronounced for substantive innovation than for strategic innovation. We document heterogeneous firm responses to climate stress and clarify the economic and behavioral drivers of green transformation.

Suggested Citation

  • Du, Qunyang & Bao, Liner & Li, Zhongyuan & Xu, Zheyu, 2026. "Green innovation in a warming climate: Substantive commitment or strategic response?," Research in International Business and Finance, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:riibaf:v:89:y:2026:i:c:s0275531926002163
    DOI: 10.1016/j.ribaf.2026.103489
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