High-polluting Industries Research Articles

Impact of government ownership on private sector enterprises’ environmental responsibility: empirical evidence from Chinese listed firms

Purpose Against the background of actively promoting the reform of mixed ownership in China, this study regards government ownership in private sector enterprises (PSEs) as an important political connection mechanism and examines private holding listed companies in high-polluting industries that sold China A-shares from 2012 to 2019.Design/methodology/approach Using regression models such as Tobit and negative binomial estimation, the research empirically examines the impact of government ownership in PSEs on the corporate fulfillment of their environmental responsibilities.Findings Government ownership can effectively promote PSEs to fulfill their environmental responsibilities. Government ownership, as a corporate-level political connection mechanism, enables the government to provide firms with more environmental protection subsidies and environmental tax incentives, encouraging firms to fulfill their environmental responsibilities. When considering the policy risks faced by PSEs, government ownership effectively reduces the impact of policy uncertainty on firms’ fulfillment of environmental responsibilities. Additionally, verifying the economic development level of the city in which the firm is located makes the positive impact of government ownership on fulfillment of environmental responsibilities of PSEs in regions with lower economic development levels more significant.Originality/value Unlike existing studies that generally use the personal political identity of entrepreneurs to measure the political connections of PSEs, this study regards government ownership in PSEs as an important political connection mechanism. It provides a useful reference for China to formulate environmental protection policies for PSEs.

Exchange Rates, Optimization of Industrial Resources Allocation Efficiency, and Environmental Pollution: Evidence from China Manufacturing

The impact of exchange-rate fluctuations on resource reallocation is of particular interest to researchers and policymakers with China’s further opening to the international market and the transformation of economic growth. With high-speed growth, pollution issues have become an international concern. This paper examines how RMB exchange-rate movements affect resource allocation efficiency within industries at different pollution levels, based on the data of Chinese industrial enterprises during 1998–2007. Unlike previous studies, we analyze how within-industry productivity dispersion reacts to exchange-rate appreciation from the perspective of the heterogeneity across firms in their exposure to foreign competition in each industry. Our findings suggest that appreciation causes an increase in productivity dispersion, which implies a decrease in resource allocation efficiency. The increased dispersion of industries with higher pollution levels is more diminutive than lower levels. The productivity dispersion is intended to shrink for high-polluting industries due to the real exchange-rate appreciation. Appreciation plays a positive role in efficiency for pollution-intensive industries.

Can digital finance promote corporate green innovation?

Green innovation is essential for improving the environment and realizing sustainable economic development. In this research, we use a sample of Chinese listed firms from 2011 to 2018 to examine whether and how digital finance affects corporate green innovation. The proof we provided shows that digital finance has a positive effect on green innovation. The result is consistent with a series of robustness tests. Further analyses show that digital finance promotes green innovation by alleviating financial constraints and increasing R&D investment. And the effect is more pronounced in economically backward regions and high-polluting industries. This research provides practical guidance for promoting finance development and improving the ecological environment.

How to Enhance the Green Innovation of Sports Goods? Micro- and Macro-Level Evidence From China’s Manufacturing Enterprises

This study aims to explore the driving factors of green innovation, and uses the micro- and macro-data from China’s sports goods manufacturing industries. In particularly, sports goods manufacturing enterprises are identified by the textual analysis of information disclosure, and the competitive environment faced by each enterprise is built through their unique closest rivals. Empirically, this study finds that competition and policy can promote green innovation in sports goods manufacturing industries, and industrial policy can moderate the role of product market competition in promoting green innovation. Considering the characteristics of the Chinese market, more industrial policies may intensify the competition among manufacturing enterprises, forcing such enterprises to obtain competitive advantages through innovation outcomes. It is worth noting that the association between product market competition and green innovation changes as financial constraints increase, and this may be caused by the impact of industrial policy on the interactions among enterprises. After implementing the strict environmental policy, product market competition and industrial policy can both promote green innovation. In high-polluting industries, sports goods manufacturing enterprises get more social attention and suffer from higher penalties for environmental violations, so that such enterprises will get more motivations from industrial policies to support green innovation. In addition, we also find that there is a significant inverted-U shape relationship between industrial policy and green innovation in sports goods manufacturing industries. As financial constraints increase, the non-linear relationship between product market competition and green innovation converts from a U shape relationship to an inverted-U shape relationship. Our findings can provide a better understanding of the investment of sports goods manufacturing enterprises in green innovation.

Exploring the impact of green credit policy on green transformation of heavy polluting industries

As a market-based financial instrument, green credit is one of the key drivers for constructing green financial system. Green credit policy (GCP) can guide capital flow from high-energy consumption and high-pollution industries to technologically advanced emerging industrial sectors, so as to support the development of green industries and curb the emissions of polluting industries. In order to explore the extent to which the goal of green credit policy in China has been achieved, based on the micro data of China's listed enterprises from 2009 to 2017, this paper explores the impact of “Green Credit Guidelines” (2012 Guidelines) policy on the green transformation of heavy polluting industries (HPIs) by using a Difference in Differences (DID) and Propensity Score Matched-Difference in Differences (PSM-DID) models. We then analyze the mechanism between GCP and green transformation of HPIs and identify the heterogeneous effects of GCP on the green transformation of HPIs. The results show that the 2012 Guidelines significantly promote the green transformation of HPIs, through debt financing constraints and equity financing constraints. The effect of 2012 Guidelines on green transformation of small-scale and private enterprises is more pronounced. However, the positive effect of 2012 Guidelines on the green transformation of HPIs has not been sustained in the long term. Our study provides an insight for decision makers to manage green transformation of HPIs from the GCP perspective, by informing the economic consequences of GCP and pushing the industrial transformation towards green development.

A study on liability for environmental pollution in Beijing-Tianjin-Hebei Region

The Beijing-Tianjin-Hebei metropolitan cluster has inevitably brought many problems along with its vigorous economic development, one of which is environmental pollution. Based on our previous research, we clarified the mechanisms and characteristics of environmental pollution transfer in the Beijing-Tianjin-Hebei and surrounding regions, and this paper refered to the further correct delineation of the responsibility for environmental pollution control in Beijing-Tianjin-Hebei and the surrounding provinces. This study measureed the full cost of environmental pollution control and economic benefits in Beijing, Tianjin, Hebei and surrounding provinces in terms of the economic costs required for governance, and constructed an inequity index (CG index) to characterise the inequity in the share of costs borne and benefits by the aforementioned provinces. The results of the study showed that there is significant environmental inequity and inequality of responsibility in the process of regional trade among the provinces in and around Beijing, Tianjin, Hebei and the surrounding region. The developed provinces (Beijing and Tianjin) benefited more and bore less responsibility for pollution control due to their optimised industrial structure, producing more capital-intensive and high value-added industries, while provinces with heavy chemical, high pollution and labour-intensive industries, such as Hebei and Shanxi, developed their economies more in the primary and secondary sectors due to their irrational industrial structure, and therefore benefited less and bore more when trading goods with the developed provinces (Beijing and Tianjin) benefited less and took more responsibility for pollution control. Based on the above findings, policy recommendations are then put forward to provide suggestions and references for the collaborative management of environmental pollution in Beijing, Tianjin and Hebei.

Economic Growth at the Expense of Environmental Degradation: Evidence from the Philippines

This study presents an empirical analysis of the impacts of three macroeconomic variables namely, Gross Domestic Product, Foreign Direct Investment, and Urban Population on the emissions of CO2 in the Philippines from the period of 1970 to 2018. The results reveal that Gross Domestic Product and Foreign Direct Investments exhibit a statistically significant relationship with CO2 emissions. The findings of this study suggest that the Philippines’ reliance on high-polluting industries as drivers of economic growth will only worsen its environmental quality. Moreover, its weak environmental laws provide foreign investors the opportunity to exploit the environment in exchange for FDI inflows to the country. Furthermore, the results of this study support the scale effect in the Environmental Kuznets Curve hypothesis, as well as the Pollution Haven Hypothesis.

The effects of Mandatory Energy Efficiency Policy on resource allocation efficiency: Evidence from Chinese industrial sector

The extensive theoretical literature emphasizes that the improvement of resource allocation efficiency plays a critical role in the economic efficiency effect of energy and environmental policies. However, few empirical studies focus on the assessment of this effect of energy policies on resource allocation efficiency. Thus, this article treats the implementation of China’s Mandatory Energy Efficiency Policy (MEEP) during the 11th Five-Year Plan, as a quasi-natural experiment to testify the impact of MEEP on resource allocation efficiency of industries. To this end, an annual data panel including a total of 2,382,263 observations from 625,478 micro enterprises at the city sub-sector level is constructed for 280 cities from 1998 to 2008. The Difference-in-Difference (DID) model and the DDD model are adopted to estimate the effect of MEEP on the resource allocation efficiency of industries in China and its heterogeneity across sub-industries, respectively. The results show that China’s MEEP enforced during the 11th Five-Year Plan indeed contributes significantly to the efficiency improvement of resource allocation in the industrial sector. The conclusion is still robust by replacing the different indicators or changing time intervals. Further, this effect for the high-energy-consuming or high-polluting industries is significantly lower than that in others. It may be attributed to the differences in the response rates to MEEP caused by the ownerships among firms and industries.

Is Cross-Shareholding Conducive to Corporate Sustainability? Evidence From the Environmental Investment of Chinese Listed Firms.

This article examines the impact of cross-shareholding on corporate environmental investment (Env) using Chinese listed firms from 2014 to 2019 as the research setting. The results show that there is a positive impact of cross-shareholding on corporate environmental investment. The finding remains robust to a battery of robustness checks. In addition, the heterogeneity analysis illustrates that the positive impact of cross-shareholding on corporate environmental investment is more pronounced in state-owned firms and high-polluting industries when compared to non-state-owned firms and low-polluting industries, respectively. This study extends the research on cross-shareholding and provides practical implications for corporate sustainable development.

The application of MFA for rural industrial symbiosis assessment

One of proposed strategies to solve current environmental challenges includes the industrial symbiosis. However, proper evaluation methods are required to measure the potential benefits of industrial symbiosis, one of those includes the material flow analysis (MFA). MFA develops a unified database and a Step-by-Step process starting from the input, process, and output process to clarify the distribution of waste and the recycling process in the aluminum industry. The aluminum industry is regarded as an energy-intensive and high-pollution industry. The development of industrial symbiosis in the aluminum industry has significantly reduced environmental pressures and facilitated green development and green industry. Home industries that process aluminum slag raw materials require high energy thereby generating high waste during the production process. The applied method includes material flow analysis (MFA). The MFA results indicated that the production elements of the aluminum slag industry consist of 11 elements ranging from raw materials, fuel, clean water, human resources, capital, production processes, production equipment, housekeeping, products produced, waste to waste utilization. Approximately 44% of the industry sold waste to other industries, 42% of the waste was reprocessed, and 14% of the aluminum industry stockpiles production was in the form of waste in open spaces. The industrial symbiosis in the aluminum industry was an open cycle, indicating that the symbiosis produces waste, which had not been fully utilized; but in fact, the waste had potential as a source of raw materials, energy, and materials in other industrial processes.

Does the resource-dependent motivation to disclose environmental information impact company financing? Evidence from renewable energy companies of China

Corporate environmental information disclosure systems are important for controlling pollution caused by corporate activities. However, different motives associated with environmental information disclosure have different influences on the financing of companies. This paper adopts renewable energy companies instead of high pollution industries as a research object. The study analyzes the resource-dependent disclosure motivation of renewable energy companies, and the impact of environmental information disclosure on the scale and cost of direct and indirect financing. The results show the following. First, renewable energy companies in China have a resource-dependent motivation to disclose environmental information, with a gap between the level of environmental information disclosure and their actual environmental performance. Second, renewable energy companies may obtain more direct financing amount and lower indirect financing costs, but cannot obtain lower direct financing costs and more indirect financing amount by improving the level of environmental information disclosure with the resource-dependent motivation. Third, there are differences in the specific incentives for environmental information disclosure among the Eastern, Middle, and Western regions of China. The government needs to standardize the detailed rules and standards of the corporate environmental information disclosure system, and improve the environmental protection awareness and the implementation of green credit in the Western region.

Spatiotemporal coupling measurement of industrial wastewater discharge and industrial economy in China.

With the industrial-level panel data on total output and wastewater discharge over the period of 1997 to 2018, this paper employs GIS and ESDA methods to empirically investigate the spatial relationship between industrial total output and wastewater discharge. In this paper, we empirically examine whether and how industrial wastewater discharge in a particular province may affect the wastewater discharge in its neighboring provinces. Results suggest that provinces (municipalities) with large-scale industrial sewage discharge are located along riversides and coastal areas and these discharges then gradually distribute to coastal, central, and western areas. Results also show a strong spatial autocorrelation of industrial wastewater discharge between the observed local province and its neighboring provinces which is increasing over time. In addition, there is also a significant spatial spillover effect of industrial wastewater discharge among neighboring provinces in China's eastern and central regions, indicating a structural convergence of high-pollution industries.

Do environmental regulations matter on Spanish foreign investment? A multisectorial approach.

A gravity model is used to investigate the impact of the stringency and enforcement of the environmental regulation on Spanish investment flows abroad during the period 2008-2018. From the pollution haven hypothesis' (PHH) perspective, the research tests if offshoring and outsourcing processes from Spanish multinational enterprises (MNEs) were due to movements through FDI of high-polluting industries seeking refuge in countries with a low standard of legal environmental protection framework. The analysis includes FDI into primary, manufacturing, construction, wholesale and retail, professional services, leisure services, utilities, and other services. When no sectoral approach is developed, PHH seems to be not held. However, the multisectoral perspective states that MNEs in primary and manufacturing sectors seek refuge in countries with a low standard of legal environmental protection framework.

Green technology innovation efficiency of energy-intensive industries in China from the perspective of shared resources: Dynamic change and improvement path

Energy-intensive industries are high-energy-consumption and high-pollution industries, and their green technology innovation efficiency deserves in-depth investigation. This paper explores the efficiency of green technology innovation and its combinatorial improvement path in energy-intensive industries from 2005-2015 with a two-stage data envelopment analysis model based on shared and additional input resources and fuzzy-set qualitative comparative analysis. The results indicate that (1) the overall efficiency of green technology innovation in energy-intensive industries as a whole showed a fluctuating upward trend from 2005 to 2015, benefiting from the improvement of technology R&D efficiency and achievement conversion efficiency; (2) there is high industry heterogeneity in the green technology innovation capacity of energy-intensive industries, and the difference in the average efficiency in green technology innovation between the industries with the strongest innovation strength and that with the weakest is as high as 0.615; (3) small-scale enterprises’ strategies should be based on foreign scientific research support or environmental regulations, supplemented by a small amount of industry-university-research cooperation. Large-scale enterprises’ strategies should be based on foreign scientific research support and industry-university-research cooperation, supplemented by appropriate environmental regulations and government investment. This study provides a reference for the formulation of green technology innovation development strategies for energy-intensive industries.

China’s New Environmental Protection Law and Green Innovation: Evidence from Prefecture-Level Cities

This paper examines the impact of China’s new environmental protection law on green innovation. Using a large sample of Chinese prefecture-level cities for the 2010–2016 period and the difference-in-differences (DID) methodology, we provide strong evidence that the new environmental protection law promotes green innovation. This finding is robust to a battery of sensitivity tests. The micromechanism analysis shows that the new environmental protection law can promote green innovation by imposing stricter financial constraints on enterprises in high-pollution industries and increasing their incentives for green innovation to meet green credit requirements. Further, we find that the impact of the new environmental protection law on green innovation is more prominent in prefecture-level cities with a lower level of banking competition and for prefecture-level cities with stronger intellectual property protection. Overall, these findings suggest that the new environmental protection law has played an important role in promoting green innovation in China. To improve the effect of the new environmental protection law on green innovation, the government can consider lowering banking competition and strengthening intellectual property protection.

Environmental regulation and green innovation: Evidence from China’s new environmental protection law

This study investigates the impact of China’s new Environmental Protection Law on the green innovation behaviour of listed companies in high-polluting industries. The implementation of China’s strict and new Environmental Protection Law provides a quasi-natural experimental setting for examining the causal effect of environmental regulation on corporate green innovation. Based on data of the application for environmental patents of high-polluting firms listed in Shanghai and Shenzhen Stock Exchanges from 2010 to 2017, this study analyses the change in the green innovation behaviour of firms after the implementation of China’s new and stringent Environmental Protection Law using the PSM-DID approach. We find that firms tend to file more applications for environmental patents, including patents for inventions and utility models after the implementation of the new Environmental Protection Law. Further analysis shows that while this effect is stronger for state-owned enterprises, it is weaker for firms headquartered in cities where economies depend more on the secondary industry. Firms in concentrated industries have more incentive to file applications for green invention patents than those in competitive industries. The study has important implications for policy makers on better implementing the environmental protection law in developing countries.

Double-threshold effect of technological innovation on environmental-responsibility fulfillment: Evidence from high-polluting SMEs in China

ABSTRACT This paper investigates the double-threshold effect of technological innovation on the environmental responsibilities of Chinese small- and medium-sized enterprises (SMEs) in high-polluting industries. A data set of 381 high-polluting Chinese SMEs from 2012 to 2018 was analyzed using panel-threshold effect models. The results show that technological innovation has a double-threshold effect on the environmental-responsibility fulfillment of high-polluting Chinese SMEs. The impact of technological innovation on environmental responsibility is significantly positive only when R&D investment intensity is within the interval between the first and the second thresholds. This study highlights the importance of technological innovation for high-polluting SMEs. It also provides suggestions for both policymakers and SME managers.

Top-runner incentive scheme in China: a theoretical and empirical study for industrial pollution control.

Pollution control policies have achieved remarkable results in China. However, industrial firms still lack enthusiasm for technological innovation to reduce pollution and endogenous motivation for controlling pollution, which pose severe obstacles to industrial pollution control. The top-runner scheme can stimulate the pollution control behaviors of firms to a certain extent. Therefore, the top-runner scheme is combined with economic incentive policies to design an appropriate incentive scheme in this paper, theoretical research is conducted on the selection standards and incentive methods, and four industries mainly responsible for pollution in a developed province of China are investigated as case studies. The results show that (1) the selection standard that stipulates the rewarded quotas instead of the discharge amount achieved higher emission reduction efficiency; (2) tax cuts are the best incentive for top-runners, and (3) the top-runner incentive scheme achieves a greater reduction effect in high-pollution industries than low-pollution industries. Value-added tax exemption for the top-runner, as determined by the rewarded quotas, contributes to increasing the enthusiasm from firms to participate in and improve pollution control measures.

The income distribution effects of environmental regulation in China: The case of binding SO2 reduction targets

Faced with serious environmental pollution, strengthening the enforcement of environmental regulations has become a priority for governments, especially with sustainable development as a main goal. However, there is not enough empirical evidence about the income distribution effect of environmental regulations. This paper analyzes binding emissions target as a policy shock of environmental regulation to empirically understand its impact on wage growth and inequality based on household and firm level data from 2002 to 2007 in China. The results show that in more pollution-intensive cities, stricter environmental regulation inhibited wage growth, furthermore widening the income gap between skilled and un-skilled labor. These results were further proofed after taking ventilation coefficients as the instrument variable. Heterogeneous tests show that this negative impact is more serious for un-skilled labor in high-polluting industries and also more significant for those located in the central and eastern parts of China.

How High-Polluting Firms Suffer from Being Distracted form Intended Purpose: A Corporate Social Responsibility Perspective.

High-polluting industries are regarded as the main sources of air pollutant emissions and the major factors that significantly destroy the ecological environment. Corporate innovation in high-polluting industries improves the energy consumption efficiency and reduces the emission of air pollutant, which mitigates the conflict between environment and economy. Using the sample of China’s listed firms from 2010 to 2017, this study examines the impact of corporate social responsibility (CSR) and financialization on corporate innovation in high-polluting industries. The results show that there is a positive association between CSR and corporate innovation, while there is a negative association between financialization and corporate innovation. Furthermore, the financialization of high-polluting firms can alleviate the promotion role of CSR in the innovation process. The financialization of state-owned enterprises in high-polluting industries may not have a crowding-out effect on research and development (R&D), but it can limit the R&D promotion effect of CSR engagements. In contrast, the financialization of non-state-owned enterprises will hinder corporate innovation, but it will not affect the association between CSR and technology innovation. We also find that the financialization of high-polluting firms with low financial constraints can alleviate the promotion role of CSR engagements in innovation. Meanwhile, the CSR engagements of high-polluting firms with high financial constraints play a stronger role in corporate innovation. During the implementation of environmental policies, the negative association between financialization and corporate innovation has been strengthened. Our findings can encourage high-polluting firms to make more efforts in environmental protection and social stability.