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Extreme Heat Risk and Corporate Green Investment: Evidence from Chinese High-Carbon Firms

In: Proceedings of the 2025 3rd International Academic Conference on Management Innovation and Economic Development (MIED 2025)

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  • Bingcheng Tang

    (North China Electric Power University)

Abstract

This paper seeks to examine the correlation between severe temperatures and the extent of corporate green investment. We examine a group of high-carbon enterprises listed on China's A-share market from 2010 to 2022, with data on very high temperatures in the cities housing these firms. Extremely high temperatures markedly increase the level of enterprises’ green investment. The results undergo a number of rigorous tests, encompassing alternate indicators, the instrumental variables method, and propensity score matching methodology. The findings from the mechanism tests demonstrate that executives possessing strong green perceptions and elevated corporate ESG ratings can amplify the influence of extreme heat on the extent of firms’ green investment. Furthermore, the effect of extreme heat on firms’ green investment is more significant for non-state-owned enterprises, those with high equity concentration, and firms located in central and western cities. These findings elucidate the process by which extreme climate influences corporate green investment behavior from many viewpoints.

Suggested Citation

  • Bingcheng Tang, 2025. "Extreme Heat Risk and Corporate Green Investment: Evidence from Chinese High-Carbon Firms," Advances in Economics, Business and Management Research, in: Barbara Siuta-Tokarska & Adriana Grigorescu & Md. Mamun Habib & Yifeng Zhu (ed.), Proceedings of the 2025 3rd International Academic Conference on Management Innovation and Economic Development (MIED 2025), pages 785-808, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-835-6_84
    DOI: 10.2991/978-94-6463-835-6_84
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