Threshold effects of environmental regulation types on green investment by heavily polluting enterprises

Abstract

Background: In the stage of sustainable development, enterprises should not only focus on economic efficiency, but also on ecological protection, for which the governments of various countries has adopted various environmental regulation methods to promote green investment by enterprises. However, there are many types of environmental regulations, and the relationship between policy formulation and implementation effects is complicated. Heavily polluting enterprises as the main carrier of resource consumption and pollutant emissions is the main target of environmental regulation. Based on this, we took China's heavily polluting listed companies as examples to explore the impact of different types of environmental regulations on green investment in heavily polluting enterprises. Results: In this paper, environmental regulations were divided into formal and informal types, of which formal environmental regulations (FER) were subdivided into command-control and market-incentive types. The empirical results showed that the relationship between command-control environmental regulations and green investment by heavily polluting enterprises presents an inverted “U” shape, and market-incentive environmental regulations first have no effect on and then promote green investment by heavily polluting enterprises. Besides, informal environmental regulations (IER) have maintained a positive effect on green investment by heavily polluting enterprises. Conclusions: Heavily polluting enterprises, respectively, employ passive, active and voluntary green investment strategies under the three types of environmental regulations, providing a reference for the government to promote green investment by enterprises by environmental regulations more effectively.