Green innovation, environmental governance and green investment in China: Exploring the intrinsic mechanisms under the framework of COP26

Abstract

The United Nations Climate Change Conference, known as COP26, has highlighted the crucial role of increasing climate investment in mitigating climate change through ecological governance and the diffusion of green innovations. In response, we conducted a study using data from 30 regions in China between 2011 and 2019, employing a spatial model to investigate the relationship between green innovation, environmental regulations (ER), and green investment. We also examined the potential nonlinear relationships and influence mechanisms underlying these effects. Our study reveals that ER can stimulate green innovation both locally and in surrounding regions. Furthermore, ER and green innovation are found to benefit from green investment, forming a positive feedback loop. Enhancing government support, financial development, and ER can potentially amplify the impact of green investment in promoting green innovation. These findings provide a theoretical and institutional foundation for firms to promote green innovation by addressing institutional and investment gaps. Moreover, the study offers important practical implications for environmental policy-making and addressing environmental issues within the COP26 agenda.