How Green Finance Drives the Synergy of Pollution Reduction and Carbon Mitigation: Evidence from Chinese A-Share Firms

As a pivotal instrument for integrating environmental governance with a low-carbon transition, green finance plays a critical role in achieving China’s dual-carbon goals. This study draws on a panel dataset covering 2008–2023, combining city-level indices of green finance development with firm-level emissions data from Chinese A-share listed companies. It investigates how green finance influences firms’ ability to reduce pollution and carbon emissions in a coordinated way, as well as the mechanisms and boundary conditions of this relationship. The results reveal that green finance significantly enhances firms’ synergistic performance in pollution and carbon abatement. The effect operates mainly through two channels: reallocating resources more efficiently and strengthening ESG performance. The benefits are particularly evident among firms with a stronger green innovation capacity, higher levels of carbon market participation, and more advanced environmental management systems. Green finance also helps deter corporate greenwashing. In addition, financial technology and environmental information disclosure amplify its positive impact. These findings highlight the need to deepen the integration of ESG evaluation with capital allocation and to design green financial instruments suited to firms at different stages of transition. They also point to the importance of harnessing the complementarities of fintech and environmental transparency to further enhance firms’ sustainable performance.