How Climate Risk Affects Corporate Green Innovation: Fresh Evidence from China’s Listed Companies

Green innovation is a crucial strategy for addressing climate risks, yet such risks' impacts on firms' green innovation remains a complex and critical issue. Using a sample of A-share listed companies in China, this research finds that climate risk significantly inhibits firms' green innovation by increasing their operating costs, worsening financial situations, and lowering capital allocated to R&D. This inhibitory effect is more pronounced for firms located in typhoon-prone, flood-prone, and low temperature and severe cold areas. Moreover, climate risks substantially suppress green innovation in private enterprises, firms with limited government subsidies, and companies within nonpolluting industries. Further research demonstrates that environmental, social, and governance factors positively moderate the relationship between climate risk and firms' green innovation. These findings deepen our understanding of how climate risk impacts firms' decision-making, highlight the importance of corporate social responsibility, and provide practical guidance for sustainable development and climate adaptation.