Can Climate Transition Risks Enhance Enterprise Green Innovation? An Analysis Employing a Dual Regulatory Mechanism

In the context of the global pursuit of the ‘carbon neutrality’ objective, Chinese enterprises are proactively advancing green development and low-carbon transformation. Among these efforts, climate transition risks have emerged as a crucial factor affecting strategic enterprise decisions and long-term competitiveness. This study utilizes a sample comprising Chinese A-share listed enterprises over the period from 2012 to 2024 to construct an enterprise climate transition risk index using text analysis methods. It empirically investigates this index’s impact on enterprise green innovation by adopting panel data analysis method to construct a fixed effects model and further examines the moderating roles of institutional investors’ shareholding and enterprise environmental uncertainties in response to climate transition risks. The research findings indicate the following: First, climate transition risks significantly enhance enterprise green innovation. The validity of this conclusion persists following a series of robustness and endogeneity tests, including replacing the explained variable, lagging the explanatory variable, controlling for city-level fixed effects, and applying instrumental variable methods. Second, both institutional investors’ shareholding and enterprise environmental uncertainties exert a significant positive regulatory effect on the relationship between climate transition risk and green innovation, indicating that external monitoring and heightened risk perception jointly enhance enterprises’ responsiveness in driving green innovation. Thirdly, heterogeneity analysis indicates that the positive impact of climate transition risks on green innovation is notably amplified within non-state-owned enterprises and manufacturing enterprises. By examining the dual regulatory mechanisms of ‘external monitoring’ and ‘risk perception’, this study broadens the study framework on the relationship between climate risks and enterprise green innovation, offering new empirical evidence supporting the applicability of the ‘Porter Hypothesis’ within the context of climate-related challenges. Furthermore, it provides valuable implications for policymakers in refining climate information disclosure policies and assists enterprises in developing forward-looking green innovation strategies.