Climate risk and adaptive green innovation : evidence from China

Abstract

Firms’ adaptation to climate risk is crucial for economic resilience. This paper links 2724 Chinese meteorological stations with A-share listed firms from 2006 to 2020 by geographic proximity. We construct a comprehensive climate risk measure via the entropy method and find that climate risk can promote green invention patent applications at the firm level. Mechanistically, climate risk drives green innovation by strengthening external government environmental regulations and internal corporate environmental responsibility. The effect is stronger in non-polluting industries and when firms receive more attention from social media. This study enhances understanding of firms’ positive adaptation to climate risk and offers new insight into green innovation drivers.