Government Subsidies, Public Environmental Attention, and Sustainable Innovation Performance of Environmental Protection Enterprises

In the context of the dual-carbon goals and the broader United Nations 2030 Agenda for Sustainable Development, stimulating innovation motivation within environmental protection enterprises holds significant strategic importance for achieving long-term sustainability. Drawing on institutional theory and signaling theory, this study examines how government subsidies influence the sustainable innovation performance in China’s environmental protection industry and investigates the boundary conditions and mechanisms of this relationship from a socio-economic and integrated policy perspective. Using a sample of 121 listed environmental protection enterprises in China from 2016 to 2025, this paper empirically analyzes the impact of government subsidies on both the quantity and quality of innovation output. It innovatively incorporates the market-driven factor of public environmental attention into the analytical framework to test its moderating effect and examines the mediating role of corporate social responsibility. The findings indicate that government subsidies significantly enhance both the quantity and quality of innovation output from environmental protection enterprises, thereby contributing to their sustainability transition. Public environmental attention positively moderates the innovation-incentivizing effect of government subsidies, with a stronger moderating effect on innovation quality than on quantity. Heterogeneity analysis reveals that the incentive effect of government subsidies on innovation quantity is significant only in the eastern and western regions of China, while the effect on innovation quality is more pronounced in state-owned enterprises and the western region, offering insights for region-specific and ownership-specific sustainable policy designs. Mechanism analysis indicates that government subsidies promote innovation performance by encouraging firms to fulfill corporate social responsibilities, with CSR serving as a partial mediator. These findings extend institutional and signaling theories to the context of environmental protection enterprises and provide a framework for quantifying and monitoring the effectiveness of sustainability policies. Based on the conclusions, relevant policy optimization suggestions are proposed to align industrial innovation with the principles of sustainable development.