Corporate sustainability and CO2 emissions control efficeincy: unveiling the impact of economic policy uncertainty and policy shocks

Abstract This study investigates how corporate sustainable growth (SUSG) influences firms’ revenue-based CO₂ emission control efficiency (CCE), emphasizing the moderating role of economic policy uncertainty (EPU) and the effects of carbon-control policy shocks. Grounded in stakeholder and institutional theories, the analysis draws on panel data of Chinese A-share listed firms from 2010 to 2022. The results show that sustainable corporate growth significantly enhances revenue-based CO₂ control efficiency, while higher EPU weakens this positive relationship. Channel analysis reveals that fiscal policy is the most influential factor hindering emission-control efficiency. Mechanism analysis reveal that that fiscal tools including provincial technical efficiency, tax discounts, and innovation subsidies behave differently to environmental sustainability. Heterogeneity tests indicate that smaller firms with high TobinQ, low-leverage firms, state-owned enterprises, and firms with less gender diversity achieve relatively higher revenue-based CO₂ control efficiency than their industry peers. Moreover, policy shock analysis confirms that carbon-control policies strengthen the positive impact of sustainable growth on CO₂ efficiency and mitigate the adverse moderating effect of EPU. Regional analysis further shows that these policy effects are strongest in western China, where policy interventions neutralize EPU’s influence. Overall, the findings enrich the understanding of how sustainability and policy dynamics jointly shape corporate environmental performance, offering valuable insights for both policymakers and business leaders seeking to align growth with low-carbon transition goals.