Suppression Without Spillovers? The Relative Effects of Carbon Trading Pilots and Platform-Host Cities on Green Investment in Guangdong

Against the backdrop of climate governance, carbon emissions trading markets have become an important market-based instrument for China to achieve its "dual carbon" goals, yet the direction of their impact on green investment remains contested, and direct evidence on spatial spillovers is lacking. Using city- aggregated data on listed companies' environmental investment in 12 prefecture-level cities in Guangdong Province from 2010 to 2020, this paper treats the Guangdong carbon trading pilot as a quasi- natural experiment with Guangzhou and Shenzhen as the treated group, and identifies effects using two- way fixed-effects multi-period DID and SLX models. We find that, relative to non-platform cities within the province, listed companies' environmental investment in Guangzhou and Shenzhen is significantly suppressed (did = -1.618, bootstrap p < 0.001); dynamically, the effect exhibits a pattern of "immediate shock — brief rebound — renewed negative in the medium-to-long run (marginally significant)." Across all three spatial weight matrices, no significant spatial spillover is detected, although this null result cannot rule out the existence of spillovers. Juxtaposed with existing evidence that carbon markets improve corporate ESG performance, our findings suggest that the policy may induce an ESG "word– deed decoupling." Owing to the province-wide coverage of the provincial carbon market and to disclosure constraints, the evidence in this paper is suggestive at the scale of the Pearl River Delta city cluster.