Does public environmental concern cause pollution transfer? Evidence from Chinese firms' off-site investments

Abstract

The power of public environmental concern cannot be ignored. It is vital in promoting environmental legislation, corporate social responsibility, and sustainable development. Existing studies have discussed the positive governance effects of public environmental concern on environmental quality but have neglected the issue of environmental inequality due to pollution transfer resulting from differences in public environmental concern. We used the data from the off-site investment of Chinese heavy polluting firms to reveal the impact of public environmental concern on pollution transfer. Our research revealed that (1) Public environmental concern causes polluting firms to transfer out, thus generating the pollution transfer phenomenon. (2) Public environmental concern can cause pollution transfer through increased environmental penalties. From the perspective of external environmental incentives, market competition, market potential, and government environmental concern strengthen the positive influence of public environmental concern on pollution transfer. In terms of the intrinsic motivation of firms, risk-taking capacity, green innovation ability, and asset-stranding risk weaken the positive influence of public environmental concern on pollution transfer. (3) The public environmental concern is also characterized by “grasping the large and letting go of the small”. Public environmental concern remarkably induces pollution transfer when firms' environmental awareness is low and local government officials' political incentives are high. These findings help policymakers to place greater emphasis on the power of public concern. Moreover, they can further improve the pluralistic governance structure of environmental regulation.