Does Climate Risk Promote Green Innovation in Enterprises?

Can enterprises respond to climate risks through green innovation? This is a question of shared concern across society. Using a sample of Chinese A-share listed companies from 2009 to 2022, this paper empirically examines the impact of climate risk on green innovation in enterprises and its mechanisms. The study finds that climate risk can indeed significantly promote green innovation in enterprises. On average, for every one standard deviation increase in the climate risk index, the level of green innovation in enterprises rises by 2.196 percentage points. Mechanism analysis reveals that climate risk drives enterprises to engage in green innovation through digital transformation and R&D investment. This promoting effect is stronger in non-state-owned enterprises and high-pollution industries. Further research finds no significant relationship between green innovation and green total factor productivity in enterprises, suggesting that the motivation for green innovation may not solely arise from addressing climate risks but could also be influenced by government subsidies and other factors. The conclusions of this paper are significant for improving enterprises' ability to cope with climate risks and provide theoretical support for governments in formulating climate adaptation policies.