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Turning Uncertainty into Opportunity: Climate Policy Uncertainty and Firms’ Green Innovation Boundaries

Author

Listed:
  • Jie Fu

    (School of Economics and Management, Lanzhou University of Technology, Lanzhou 730050, China)

  • Junxia Zhang

    (School of Economics and Management, Lanzhou University of Technology, Lanzhou 730050, China)

Abstract

With the intensification of climate change and the acceleration of the low-carbon transition, climate policy uncertainty (CPU) has become a critical external shock shaping firms’ green innovation behavior. Using a panel of Chinese A-share listed firms from 2011 to 2023, this study constructs a firm-level measure of CPU and examines its impact on firms’ green innovation boundaries and the underlying mechanisms. The results show that CPU significantly expands firms’ green innovation boundaries, and this effect is notably obvious in areas with stronger green innovation ecosystems and robust intellectual property protection. Mechanism analyses indicate that green strategic orientation and digital–green technology integration capability play significant partial mediating roles. Moreover, green finance and peer effects significantly strengthen the positive relationship between CPU and green innovation boundaries. Further analyses reveal that expanding green innovation boundaries not only enhances firms’ sustainable green innovation capability but also increases market share, thereby transforming CPU into long-term technological and competitive advantages.

Suggested Citation

  • Jie Fu & Junxia Zhang, 2026. "Turning Uncertainty into Opportunity: Climate Policy Uncertainty and Firms’ Green Innovation Boundaries," Sustainability, MDPI, vol. 18(10), pages 1-19, May.
    • Handle: RePEc:gam:jsusta:v:18:y:2026:i:10:p:4814-:d:1940808
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