Can green credit policy reduce corporate carbon emission intensity: Evidence from China's listed firms

Abstract

Green credit policy is designed to address the global climate risk. However, few studies have investigated empirically whether green credit policy indeed reduces corporate carbon emission intensity. Based on firm‐level data in China and a difference‐in‐differences model, this study explores how corporate carbon emission intensity evolves following the green credit policy. We find that, on the whole, the green credit can effectively reduce corporate carbon emission intensity, while the dynamic negative effect tends to alleviate after 2017. Specifically, green credit reduces corporate carbon emission intensity mainly through lowering investment carbon intensity and enhancing environmental supervision. However, the signaling mechanism of green credit does not significantly alleviate corporate carbon emission intensity. The green credit has a stronger reduction effect on corporate carbon emission intensity with third‐party certification, non‐state‐owned ownership, and high financing constraint. We thereby suggest that innovations should be made to the standards and processes of green credit to ensure sustainability and stability. Quantitative and standardized corporate environmental information disclosure is essential for the low‐carbon effect on green finance innovation.

Striving for sustainable development: Green financial policy, institutional investors, and corporate ESG performance

“…At the macro level, extant research reveals the positive role of green financial policy in addressing ecological and environmental issues (Tan et al, 2022). At the micro level, previous studies also provide evidence that green financial policy affects financing activities and investment decisions of companies (Wang et al, 2020), and thus financial performance (Yao et al, 2021) and nonfinancial outcomes (Chen et al, 2023;Xu, Ye, et al, 2023).…”

How firms leverage corporate environmental strategy to nurture green behavior: Role of multi‐level environmentally responsible leadership

“…Top management values determine the successful adoption of proactive environmental strategy at the organizational level. For instance, in China, companies pay more attention to environmental performance because the government is rapidly improving sustainability reporting standards (Landi et al, 2022;Testa et al, 2020)and attempting to integrate pro-environmental strategies into routine business operations and activities as part of China's 2030 agenda for sustainable development (Cidca, 2018) such as green credit policy to reduce carbon emissions (Xu et al, 2023). In addition, recent environmental regulations in China require automotive manufacturers to allocate a 12% manufacturing quota to new energy 2018 and electric vehicles and regular combustion engine vehicles in 2020 (ICCT, 2018).…”

Network evolutionary game analysis of green credit: A perspective of carbon emissions trading

“…Despite the benefits of green finance, Yin and Xu (2022) Green credit facilitates financial support for green businesses in the form of debt financing (Hong et al, 2021) and enhances banks' sustainability by combining environmental regulation measures with loose monetary policies (Ding et al, 2022). Green credit exerts a remarkable negative impact on corporate carbon emissions intensity, and the optimization of energy consumption structure, the acceleration of industrial structure upgrading, and the suppression of investment carbon intensity are principal transmission channels through which green credit influences carbon emissions (Liu et al, 2023;Xu et al, 2023). Wang et al (2023) empirically demonstrated that green credit exhibits a more pronounced effect in mitigating pollution abatement compared to green bonds, and energy-saving-oriented green credit that reduces emission yields a more efficient reduction in emissions than clean energy-oriented green credit.…”