Climate risk, environmental supervision, and corporate green innovation

Using data from Chinese A-share listed companies from 2012 to 2023, this study systematically examines the impact mechanism and economic consequences of climate risk on corporate green innovation. Results indicate that climate risk considerably promotes corporate green innovation activities, driving corporate green transformation through a dual pathway. First, climate risk exacerbates the superposition effect of physical risks (such as asset destruction caused by extreme weather) and transition risks (such as asset stranding triggered by policy uncertainty), compelling governments to strengthen environmental regulations and prompting enterprises to transform environmental compliance into strategic opportunities. Second, climate risk reshapes managers' cognitive frameworks and decision-making paradigms, enhancing innovation willingness by mitigating short-termism (e.g., reducing excessive focus on short-term financial indicators), thereby establishing a positive cycle of risk perception–innovation trial-and-error–capability building. Heterogeneity analysis reveals that financing constraints moderate the transmission mechanism, with less financially constrained enterprises efficiently converting climate risk into innovation momentum.