Nurturing Sustainability from Risks: How Does Climate Risk Perception Reshape Corporate Green Innovation

Abstract

Amidst the threat of increasingly extreme weather, climate change risks greatly influence firms’ decision-making. Gathering information from China’s listed enterprises from 2011 to 2023, we investigate the impact of climate risk perception (CRP) on the quantity and quality of firms’ green innovation (Q&Q). The results show that CRP promotes both Q&Q, and the promoting effect on quantity is more significant. Impact channel tests show that an encouraging impact on Q&Q is mainly achieved by increasing the number of executives with environmental backgrounds and promoting green investment. In addition, the level of external digital integration and executives’ international management experience can positively enhance the role of CRP on Q&Q. Furthermore, the promoting effect of CRP is more evident in polluting and high-tech enterprises. This study presents new empirical evidence to convey the risk signals of climate transition and transform enterprises’ risk perception into green innovation momentum.