Climate risk, digital transformation and corporate green innovation efficiency: Evidence from China

Amid the rapid evolution of economic activities, climate risk has become a significant challenge for China, profoundly influencing corporate investment decisions. This study explores the effects and mechanisms of climate risk on corporate green innovation efficiency within the Chinese context. The findings reveal that climate risk significantly enhances corporate green innovation efficiency through two stages: green technology R&D and the conversion of green outcomes, facilitated by external supervision and digital transformation mechanisms. Specifically, climate risk increases public awareness and the effectiveness of supervision over corporate environmental performance, while also bolstering the intrinsic motivation for corporate digital transformation, collectively enhancing green innovation efficiency. Furthermore, government green subsidies, market competition intensity, and corporate innovation continuity positively moderate the impact of climate risk on green innovation efficiency. These effects are particularly pronounced in high-tech firms, state-owned enterprises, firms with fewer financing constraints, and those with robust environmental management systems. Ultimately, the positive effect of climate risk on corporate green innovation efficiency further enhances corporate green total factor productivity. This research provides valuable insights for companies striving to harmonize economic benefits with environmental performance.