Heavy Polluting Industries Research Articles

Risk management and corporate ESG performance: The mediating effect of financial performance

This study utilizes a sample of A-share manufacturing companies listed in China from 2012 to 2022 to explore the intricate interplay between systemic risk, financial performance, and ESG (Environmental, Social, and Governance) performance. The findings reveal that a decrease in systemic risk positively influences corporate ESG performance with a notable lag of 1–2 periods, with financial performance serving as a pivotal mediator in this dynamic. However, within the heavy pollution industry, the enhancement of ESG performance through systemic risk reduction is observed to be comparatively muted.

Uncovering corporate greenwashing: a predictive model based on Chinese heavy-pollution industries

Purpose As the global emphasis on environmental consciousness intensifies, many corporations claim to be environmentally responsible. However, some merely partake in “greenwashing” – a facade of eco-responsibility. Such deceptive behavior is especially prevalent in Chinese heavy-pollution industries. To counter these deceptive practices, this study aims to use machine learning (ML) techniques to develop predictive models against corporate greenwashing, thus facilitating the sustainable development of corporations. Design/methodology/approach This study develops effective predictive models for greenwashing by integrating multifaceted data sets, which include corporate external, organizational and managerial characteristics, and using a range of ML algorithms, namely, linear regression, random forest, K-nearest neighbors, support vector machines and artificial neural network. Findings The proposed predictive models register an improvement of over 20% in prediction accuracy compared to the benchmark value, furnishing stakeholders with a robust tool to challenge corporate greenwashing behaviors. Further analysis of feature importance, industry-specific predictions and real-world validation enhances the model’s interpretability and its practical applications across different domains. Practical implications This research introduces an innovative ML-based model designed to predict greenwashing activities within Chinese heavy-pollution sectors. It holds potential for application in other emerging economies, serving as a practical tool for both academics and practitioners. Social implications The findings offer insights for crafting informed, data-driven policies to curb greenwashing and promote corporate responsibility, transparency and sustainable development. Originality/value While prior research mainly concentrated on the factors influencing greenwashing behavior, this study takes a proactive approach. It aims to forecast the extent of corporate greenwashing by using a range of multi-dimensional variables, thus providing enhanced value to stakeholders. To the best of the authors’ knowledge, this is the first study introducing ML-based models designed to predict a company’s level of greenwashing.

The divergence and driving factors of corporate environmental information disclosure in China

Corporate environmental information disclosure (EID) has been a widely acknowledged issue in the field of ecological environment research. This paper explores the spatiotemporal evolution characteristics of EID in China from 2008 to 2022, and discusses the industry and regional heterogeneity. It reveals significant differences in EID between heavy and non-heavy polluting industries, as well as among different economic regions, revealing that there is still significant potential for improvement in corporate environmental governance. Further, this paper establishes a two-way fixed effects model and empirically investigates the effects of internal and external driving factors on EID. In addition, Lasso regression model is used to screen the vital driving factors and analyze their relative importance. The empirical results show that enterprise size, management age, operating capacity, supervisory board size, and debt capacity have relatively more substantial explanations for changes in EID, which are more critical driving factors. The contribution of the study is to provide valuable reference for constructing corporate EID indicator system, and to points out the direction for the sustainable development of enterprises in different industries and regions. At the same time, it has theoretical guiding significance for finding the factors that promote EID and strengthening regional environmental governance.

Shaken to action: Natural disaster experience and enterprises' sustainable decision-making

This paper explores how early-life exposure to natural disasters, specifically earthquakes, induces environmental-friendly actions in China's manufacturing sector. We establish that early-life earthquake experiences lead to a reduction in enterprises' pollutant emissions, an effect that persists for up to a decade and gradually diminishing over time. Delving into the experimental economics and psychology literature, we identify key drivers of environmentally responsible behavior in firms, including long-term time preferences, prosocial behaviors, and risk-taking attitudes. The pollutant reduction effect is more prevalent in firms with stronger performance, those that are nonstate-owned, operate in heavy-polluting industries, and have endured severe earthquakes. Our research expands the understanding of climate risk, post-traumatic growth, and factors influencing corporate pollutant emissions, offering valuable insights into how individuals' preferences can be nurtured to support environmental protection efforts.

ESG performance and corporate technology innovation: Evidence from China

With the concept of sustainable development and innovation-driven development strategy proposed in China, as well as the promotion of the concept of ESG, which takes into account both economic and social benefits, it is of great theoretical and practical significance to study how ESG empowers both internal management and external investors, and ultimately enhances corporate technological innovation (CTI). This paper takes Chinese A-share listed companies from 2010 to 2021 as the research object, and tries to study the impact of ESG performance on CTI and its mechanism based on the perspective of innovation process. It is found that: (1) ESG performance can effectively promote the intensity of R&D investment, innovation output and quality of enterprises, and this conclusion still holds after a series of robustness tests. (2) The innovation incentive effect of ESG performance is more obvious in enterprises in traditional industries, manufacturing industries and heavy pollution industries; (3) ESG performance mainly affects CTI through alleviating enterprise financing constraints, improving enterprise market expectations and gathering high-end research talents. The above findings have important implications for optimizing corporate ESG disclosure mechanisms and promoting CTI through process optimization.

The industrial internet and green technology innovation

This study selects a sample of A-share listed companies in China's heavy pollution industry from 2014 to 2022 to examine the impact of the industrial Internet on enterprises’ green technology innovation. Based on the findings, the application of the industrial Internet not only improves the level of green technology innovation among enterprises in China's heavy pollution industry, but it also improves their organizational capacity to promote such innovation. In addition, the application of the industrial Internet is more conducive to the improvement of green technology innovation in state-owned enterprises, compared to private enterprises.

Information disclosure and pollution reduction: evidence from environmental NGO monitoring in China

This paper investigates the impact of environmental information disclosure on firm pollution behavior by leveraging an exogenous shock which allow Chinese environmental non-governmental organizations (ENGOs) to disclose pollution information. Using a difference-in-differences approach comparing firms in disclosed cities versus undisclosed cities, we find ENGO information disclosure significantly reduces manufacturing firm COD emissions. We explore several potential mechanisms and find that the reduction effect was primarily driven by “higher-level government supervision” rather than “public supervision.” Heterogeneous analysis reveals significant effects only for firms facing high reduction pressure, low governance costs, weak local protection, and in heavy-polluting industries. Our findings provide insights into supplementing inadequate regulations with informal institutions to achieve environmental aims within a decentralized economy.

Peer effects, environmental regulation and environmental financial integration—Empirical evidence from listed companies in heavily polluting industries

Amidst pressing global needs for environmental protection and sustainable development, the international community expects corporations to play a vital role, balancing profit pursuits with environmental responsibility. As the world's second-largest economy and a manufacturing giant, China's environmental governance and corporate models become a research centerpiece. Using the panel data of Chinese A-share heavy polluting industry listed companies from 2013 to 2020, and adopting the Linear-In-Means Model, this paper proposes for the first time that the corporate environmental financial integration is significantly influenced by the peer enterprises. Further research finds that: 1) Peer effect is more significant in private enterprises than state-owned enterprises. 2)The peer effect of environmental pollution integration of heavily polluting enterprises is sticky, mainly reflected in the effect of focus enterprises following peer enterprises to reduce their own environmental financial integration is stronger than the effect of following peer enterprises to upgrade synchronously. And this kind of stickiness is more significant in private enterprises. 3) The institutional pressure has a role in promoting the peer effect of enterprise environmental financial integration, and more significant in state-owned enterprises. Delving into the dynamics of Chinese enterprises in environmental management and financial strategies serves not only to excavate lessons from China's experience but also contributes to the global reservoir of wisdom on environmental protection and green development.

Does a Company’s Position within the Interlocking Director Network Influence Its ESG Performance?—Empirical Evidence from Chinese Listed Companies

In an era focused on deepening green sustainable development, improving corporate ESG performance has become a theoretical focal point. Starting from the positional attributes of the interlocking director network, this study investigates the influence of a company’s position within this network on its ESG performance among China’s A-share-listed companies from 2009 to 2022. It utilizes Huazheng ESG ratings from the Wind database and employs regression models, analyses, endogeneity, and propensity score matching tests via Stata15.0 to probe the internal mechanisms at play. Research findings indicate that corporations at the core of the interlocking director network exhibit significantly better ESG performance compared to those in peripheral positions. The interlocking director network enhances corporate ESG performance by improving internal control levels. Media attention positively influences the effect of the interlocking director network on corporate ESG performance. Further analysis reveals that the beneficial impact of the interlocking director network on ESG performance is more pronounced in highly marketized corporations, those outside of heavy pollution industries, and those with a higher proportion of female directors. Economically, the positive effect of the interlocking director network on ESG performance enhances both earnings per share and total factor productivity. This study offers a novel pathway for enhancing corporate sustainability in emerging economies through the lens of the interlocking director network, drawing on China’s experience. It aims to guide emerging markets in fostering ESG practices among corporations, thus offering theoretical insights for enhancing ESG performance.

Does Green Finance Affect Economic Performance? Growth and Crowding-Out Consequences

ABSTRACT Green finance is crucial to the achievement of China’s dual-carbon goals and its sustainable economic development. Based on the data from 2011 to 2020, This paper employs a double-difference method to examine two effects of green finance on economic growth, namely, its growth and crowding-out effect. The empirical results show that, in general, green finance improves the level of economic growth and doesn’t impede the entry of new enterprises, while crowding out the contribution of heavy polluting industries to the economy. Green financial policies effect economic performance mainly through resource allocation and technological innovation. Specially, in comparison to the central and western regions, green finance exerts a more pronounced influence in the eastern region, potentially attributable to disparities in regional development levels, financial system efficiency, and degrees of marketization. In addition, both growth and crowding-out effect are more significant in resource-dependent cities.

The Impact of Green Mergers and Acquisitions on Corporate Environmental Performance: Evidence from China’s Heavy-Polluting Industries

This study examined the impact of green mergers and acquisitions (green M&As) on corporate environmental performance. Applying the Differences-in-Differences (DID) model to a sample of Chinese heavy-polluting-industry companies listed on the Shanghai and Shenzhen stock exchanges from 2010 to 2022, our study results show that the adoption of green M&As by the listed Chinese heavy polluters can lower corporate environmental capital expenditure and significantly improve corporate environmental performance. Meanwhile, the positive effects of green M&As on environmental performance are also found to be stronger for state-owned enterprises, young enterprises, and enterprises located in areas with low financial investments in energy efficiency and environmental protection, according to a heterogeneity study conducted for this paper. The analysis of mediating effects shows that the green M&A of heavily polluting firms will have a catalytic effect on the improvement of firms’ environmental performance by promoting their green technological innovation and, in turn, their environmental performance. Furthermore, the moderating effect analysis demonstrates that the quality of the firm’s internal controls and the CEO’s prior environmental experience are both factors that can support the beneficial impact of green M&A on the enhancement of the firm’s environmental performance. This paper enriches the theoretical research system of green M&A and green investment driving mechanisms, and at the same time provides empirical support and strategic reference for the green strategy decision of heavy-polluting enterprises.

The charm of green finance: Can green finance reduce corporate carbon emissions?

The “dual carbon” approach, which emphasizes support for environmentally friendly development and green transition, has reignited passion for green finance. Simultaneously, green finance has progressively emerged as a pivotal approach for addressing climate challenges. The paper develops green finance indicators for Chinese provinces and carbon emission indicators for 2001–2020 A-share listed enterprises. Green financing has been proven to lessen carbon output by upgrading industrial constructure and technological advancement from macroscopical view. On the micro level, carbon emissions can be reduced through three channels: financing effect, innovation effect and external supervision effect. Further research shows that green finance has worse emission reduction results on enterprises in heavy polluting industries and resource-based industries. However, the reduction effect is better for enterprises with high capital intensity and high local marketization level. This conclusion has important guiding significance for the global government on how to achieve the “double carbon” goal through green finance reasonably and effectively.

Scrutinising commodity hype in imaginaries of the Swedish green steel transition

The technological push for hydrogen-based steel production has become a flagship project of the Swedish state for advancing its global environmental leadership and becoming the world's first fossil free welfare state. The new production process has the potential to drastically cut emissions in a heavy polluting industry. The plans also entail a drastic upscale in steel production, energy and iron ore consumption and risk increasing existing pressures on Indigenous Sami land, local communities, and biodiversity. This article sets out to investigate the frontier-making function of green steel imaginaries to contribute to debates on sacrificed spaces of extraction for green commodity demand. The article speaks to a call for a critical turn in sustainability transitions literature by introducing the concept of hype to scrutinise the material consequences of growth-based green transition imaginaries. This article builds on a narrative analysis of government, industry, and company actors’ visions of a green steel future. The analysis illustrates how sociotechnical imaginaries are constructed to enable particular industrial futures over other green transition pathways. We show that the sociotechnical imaginary of green steel, fuelled through hype, serves to advance the new commodity and growth of the industry while effectively cancelling out democratic nuance and non-extractive alternatives. The findings illustrate the importance of pluralising green imaginaries to ensure inclusive transition pathways and to nuance and discursively dismantle the hype of green transitions that fail to break with the growth paradigm.

Non-mandatory approaches to corporate environmental engagement: Insights from the Belt and Road Initiative

We investigate the impact of the Belt and the Road Initiative (BRI) proposal on environmental investments made by listed firms within China's heavy-polluting industry. Using a difference-in-differences approach, we find that the BRI proposal results in a 81.53% increase in environmental investment made by firms located in provinces along the BRI route. Mechanism analyses suggest that government subsidies for firms' environmental protection activities alleviate corporate financial constraints, thereby providing them with the financial capacity for environmental protection. We further show heterogeneous effects across ownerships and the severity of agency issues. Overall, the results suggest that a combination of non-mandatory measures and financial incentives can effectively promote corporate engagement in environmental protection efforts.

Can the green experience of CEO improve ESG performance in heavy polluting companies? Evidence from China

AbstractThis paper focuses on Chief Executive Officers (CEOs) with green experience, using data from listed companies in China's heavy pollution industry spanning from 2011 to 2021, the study explores the impact of CEO green experience on the Environmental, Social, and Corporate Governance (ESG) performance of companies. The study reveals that CEO green experiences contribute to enhancing firms' ESG performance. The research further unveils that management's green perceptions and corporate green innovations play a partial mediating role in the relationship between CEO green experiences and corporate ESG performance. Heterogeneity analysis indicates that the influence of CEO green experiences on corporate ESG performance is more pronounced in samples characterized by high environmental regulation, capital‐intensive operations, and non‐state ownership. The findings of this study enrich the theory of corporate ESG performance power mechanisms and provide theoretical references for enhancing the ESG performance of heavily polluting firms.

Environmental Social Responsibility, Local Environmental Protection Strategy, and Corporate Financial Performance – Empirical Evidence from Heavy Pollution Industry

Abstract This article empirically examines the “responsibility-performance” interaction in the process of environmental social responsibility decision-making by enterprises, using the listed companies in the heavy pollution industry as the research sample. We also use the evolutionary game theory to construct a system dynamics model for simulation analysis to explore the evolutionary qualities of the environmental responsibility behavior of heavily polluting enterprises and its relationship with financial performance under the influence of local government environmental regulation. It finds that for environmental social responsibility, a company's expected performance surplus is more likely to promote positive interaction between responsibility and performance than a gap; for regions with relatively negative environmental strategies, environmental social responsibility provides more efficient reputation transformation and motivates companies to invest in it; more competitive industries and enterprises with forward-looking environmental strategies tend to put performance feedback into the undertaking of environmental social responsibility. Therefore, the government and regulatory authorities should urge heavy polluting enterprises to implement environmental responsibility, so that they can fully realize that emission reduction and growth can be achieved at the same time and promote the financial performance of enterprises and environmental responsibility while forming a win–win situation at the ecological level and corporate social level.

Digital technologies and corporate green innovation: opening the “black box” of resource orchestration mechanisms

PurposeDriven by the dual-carbon target and the widespread digital transformation, leveraging digital technology (DT) to facilitate sustainable, green and high-quality development in heavy-polluting industries has emerged as a pivotal and timely research focus. However, existing studies diverge in their perspectives on whether DT’s impact on green innovation is synergistic or leads to a crowding-out effect. In pursuit of optimizing the synergy between DT and green innovation, this paper aims to investigate the mechanisms that can be harnessed to render DT a more constructive force in advancing green innovation.Design/methodology/approachDrawing from the theoretical framework of resource orchestration, the authors offer a comprehensive elucidation of how DT intricately influences the green innovation efficiency of enterprises. Given the intricate interplay within the synergistic relationship between DT and green innovation, the authors use the fuzzy-set qualitative comparative analysis method to explore diverse configurations of antecedent conditions leading to optimal solutions. This approach transcends conventional linear thinking to provide a more nuanced understanding of the complex dynamics involved.FindingsThe findings reveal that antecedent configurations fostering high green innovation efficiency actually differ across various stages. First, there are three distinct configuration patterns that can enhance the green technology research and development (R&D) efficiency of enterprises, namely, digitally driven resource integration (RI), digitally driven resource synergy (RSy) and high resource orchestration capability. Then, the authors also identify three configuration patterns that can bolster the high green achievement transfer efficiency of enterprises, including a digitally optimized resource portfolio, digitally driven RSy and efficient RI. The findings not only contribute to advancing the resource orchestration theory in the digital ecosystem but also provide empirical evidence and practical insights to support the sustainable development of green innovation.Practical implicationsThe findings can offer valuable insights for enterprise managers, providing decision-making guidance on effectively harnessing the innovation-driven value of internal and external resources through resource restructuring, bundling and leveraging, whether with or without the support of DT.Social implicationsThe research findings contribute to heavy-polluting enterprises addressing the paradoxical tensions between digital transformation and resource constraints under environmental regulatory pressures. It aims to facilitate the simultaneous achievement of environmental and commercial success by enhancing their green innovation capabilities, ultimately leading to sustainability across profit and the environment.Originality/valueCompared with previous literature, this research introduces a distinctive theoretical perspective, the resource orchestration view, to shed light on the paradoxical relationship on resource-occupancy between DT application and green innovation. It unveils the “black box” of how digitalization impacts green innovation efficiency from a more dynamic resource-based perspective. While most studies regard green innovation activities as a whole, this study delves into the impact of digitalization on green innovation within the distinct realms of green technology R&D and green achievement transfer, taking into account a two-stage value chain perspective. Finally, in contrast to previous literature that predominantly analyzes influence mechanisms through linear impact, the authors use configuration analysis to intricately unravel the complex influences arising from various combinatorial relationships of digitalization and resource orchestration behaviors on green innovation efficiency.

Assessing the moderating effect of environmental regulation on the process of media reports affecting enterprise investment inefficiency in China

To achieve the triple goals of digesting excess capacity, making effective investments, and accelerating green governance, it is important and necessary to comprehensively examine the intrinsic relationship between media reports, environmental regulation, and enterprise investment inefficiency. To this end, this study employs multiple econometric models to investigate the intrinsic relationship between them by using the data of listed companies in China’s A-share heavy-polluting industries between 2010 and 2020. The results of the study are as follows. Firstly, media reports can encourage heavy-polluting enterprises to pay attention to stakeholder demands and significantly ameliorate the enterprise investment inefficiency. In addition, environmental regulation can ameliorate the enterprise investment inefficiency through the “push-back effect” and “compensation effect”. Moreover, pollution fees can positively moderate the amelioration effect of media reports on the investment inefficiency of heavy-polluting enterprises, while it fails in terms of environmental protection subsidies. Finally, conclusions and policy implications are provided.

Does environmental regulation promote green technological innovation of companies? Evidence from green patents of Chinese listed companies

Abstract Environmental regulations stimulate Chinese listed companies to engage in green technology innovation. Moreover, the internal attributes of listed companies such as ownership form, the nature of the industry and locations affect the role of environmental regulations on green technology innovation. This paper selects data on Chinese-listed A-share enterprises from 2010-2019 and constructs a S-GMM model to analyze the impact of environmental regulations on green technology innovation through internal attributes of firms. The empirical results show that, first of all, in the sample period, tight environmental regulations hinder green technology innovation carried out by listed enterprises in state-owned heavy polluting industries in eastern China, and there is no innovation compensation effect. Secondly, green technology innovation in the previous period does not significantly promote green technology innovation in the current period. Finally, overvaluation of listed companies by investors encourage Chinese listed enterprises to engage in green technology innovation, especially among non-state-owned listed companies in non-heavy polluting industries. The findings of this paper provide empirical support for environmental regulation policy recommendations, that foster economic growth and promote green and low-carbon industrial transformation in the direction of high-quality development of the economy.

Effects of environmental information disclosure on the green development of mining industry: Evidence from Chinese provincial mining sub-sectors

How environmental information disclosure (EID) affects green transformation of mining industry (MI) is still unknown. Based on the panel data of China's provincial mining sub-sectors, this study explores the effects of EID on the green total factor productivity (GTFP) of China's mining sub-sectors and its influence mechanism. The research shows that EID exerts an inverted U-shaped influence on the GTFP growth of MI, implying that reasonable EID facilitates the green transformation of China's MI, while excessively EID requirements may be counterproductive. The above conclusion still holds after considering the endogeneity and conducting a series of robustness tests. Further analysis shows that the impact of EID on the GTFP of MI has a lag and long-term, and the current EID affects its future GTFP. Meanwhile, EID has a more remarkable effect on the GTFP of the MI in the eastern and central regions and the mining and washing of coal (S3) and extraction of petroleum and natural gas (S4). Mechanism analysis reveals that EID affects the GTFP of the MI through technological innovation, but due to the ‘black expected effect’, EID is still unable to increase the GTFP of the MI through energy structure. This study provides important insights for the government to fully leverage the positive role of social supervision in promoting the green development of heavy polluting industries such as MI.