Can audit committees’ environmental background promote corporate green innovation? Evidence from China

Identifying potential driving factors for corporate green innovation is vital in promoting global green development. This study aims to examine whether the environmental background of the audit committee promotes corporate green innovation and the mechanisms involved. Based on this perspective, we empirically test a research sample of Chinese A-share market-listed companies from 2007 to 2022. The results reveal that, first, the audit committee’s environmental background can significantly promote green corporate innovation. Second, the audit committee promotes green innovation by enhancing the environmental awareness of the management, increasing substantial environmental investments, and fostering environmental compliance; this effect is more pronounced in companies characterized by significant media attention and considerable involvement of the audit committee in governance. Third, green innovation can significantly enhance economic and environmental performance, although it delays its impact on short-term economic performance. The conclusions of this study provide new empirical evidence for corporate governance optimization and green innovation, and offer decision-making insights for enterprises to implement green innovation strategies for sustainable development.