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Toward carbon neutrality: How will environmental regulatory policies affect corporate green innovation?

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  • Liu, Baoliu
  • Cifuentes-Faura, Javier
  • Ding, Chante Jian
  • Liu, Xiaoqian

Abstract

Carbon neutrality achievement has had a major transformative effect on the economic and social development of countries and regions. Therefore, this study focuses on analyzing the effectiveness of environmental regulation policies in promoting institutional dividends and seeks to examine the relationship between environmental regulatory policies and green innovation development through the lens of green patents. Panel data from industrial enterprises listed in Shanghai and Shenzhen from 2010 to 2019 were used in this research, which employed fixed-effect and media-effect models to investigate the impacts and mechanisms of various types of environmental regulatory tools on corporate green innovation. The results showed that different types of environmental regulation tools have varying effects on corporate green innovation. Specifically, command-based and market-oriented environmental regulations have a positive “U-shaped” impact, whereas voluntary environmental regulations have an inverted “U-shaped” impact. Furthermore, it was found that the “innovation compensation effect” generated by the implementation of environmental regulation policies has a greater positive impact than the negative impact of the “compliance cost effect.” Additionally, geographical location and enterprise ownership play a role in determining the impact of environmental regulations on corporate green innovation. These findings emphasize the importance of strengthening environmental regulatory policies to achieve regional carbon-neutral development. Our research provides recommendations and ideas for better achieving this goal.

Suggested Citation

  • Liu, Baoliu & Cifuentes-Faura, Javier & Ding, Chante Jian & Liu, Xiaoqian, 2023. "Toward carbon neutrality: How will environmental regulatory policies affect corporate green innovation?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1006-1020.
    • Handle: RePEc:eee:ecanpo:v:80:y:2023:i:c:p:1006-1020
    DOI: 10.1016/j.eap.2023.09.019
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