Green path without waste: zero-waste city pilot construction and corporate green innovation

Abstract

Using the Zero-Waste City Pilot (ZWCP) as a quasi-natural experiment, this paper applies a standard Difference-in-Differences (DID) approach to evaluate its effect on corporate green innovation (CGI), drawing on the panel data from Chinese A-share listed manufacturing firms between 2012 and 2022. The findings show that the ZWCP significantly promotes green innovation, mainly by improving firms’ internal capabilities and external incentives. Specifically, the policy encourages investment in green technologies by expanding access to green finance, raising environmental awareness, increasing government support, and attracting greater attention from financial analysts. Further analysis indicates that the policy effects are stronger for non-state-owned enterprises, high-pollution industries, and firms in regions with greater public concern for the environment. In addition to fostering innovation, this program also brings economic and environmental benefits. Our conclusions offer micro-level evidence on how city-level environmental initiatives can drive sustainable business transformation and provide policy insights for advancing the circular economy and achieving global climate goals.