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Low-Carbon City Construction and Corporate Carbon Reduction Performance: Evidence From a Quasi-Natural Experiment in China

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Abstract

Enterprises are the market players for carbon reductions and carbon trading, and they are also the significant driving force in a low-carbon economy and society. Using the data of A-share listed companies from 2010 to 2016, this study uses a difference-in-differences (DID) model to examine the effects of the low-carbon city construction on corporate carbon reduction performance. Consistent with our hypotheses, we find that the low-carbon city construction promotes corporate carbon reduction performance. Further analysis indicates that the policy effect is stronger for state-owned enterprises (SOEs) than non-state-owned enterprises (non-SOEs). Moreover, environmental quality can affect the promotion of local government officials, which is more prominent in pilot low-carbon cities, and political promotion incentives significantly improve corporate carbon reduction performance. Furthermore, the highest emission reduction effects come in the fourth year after adopting a carbon reduction policy and are concentrated among the firms in the eastern region. Overall, our findings offer a new point view for a deeper understanding of the improvement of corporate carbon reduction performance, and provide microscopic evidence for the objective evaluation of the environmental effects of China's low-carbon city pilot policies.

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Notes

  1. Statistics from the UN's Intergovernmental Panel on Climate Change (IPCC) illustrate that China's total carbon emissions reached 1.422 billion tons in 1978, became the world's largest emitter in 2006, and hit 10.506 billion tons in 2016, nearly 30% of total global carbon emissions (Zheng and Kahn, 2017).

  2. However, a carbon ranking improvement does not necessarily mean a real reduction of carbon emissions, so we try to discuss this (see online Online appendix A for details).

  3. The first batch of low-carbon pilot areas: Guangdong province, Liaoning province, Hubei province, Shaanxi province, Yunnan province, Tianjin city, Chongqing city, Shenzhen city, Xiamen city, Hangzhou city, Nanchang city, Guiyang city and Baoding city.

  4. The second batch of low-carbon pilot areas: Hainan province, Beijing city, Shanghai city, Shijiazhuang city, Qinhuangdao city, Jincheng city, Hulun Buir city, Jilin city, Da Hinggan Ling prefecture, Suzhou city, Huai'an city, Zhenjiang city, Ningbo city, Wenzhou city, Chizhou city, Nanping city, Jingdezhen city, Ganzhou city, Qingdao city, Jiyuan city, Wuhan city, Guangzhou city, Guilin city, Guangyuan city, Zunyi city, Kunming city, Yan'an city, Jinchang city, Urumqi city.

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Acknowledgements

This study is sponsored by the National Social Science Foundation of China (19AJY001); the China Postdoctoral Science Foundation (2020T130393); the Soft Science Research Program in Shaanxi Province (2021KRM156; 2021KRM086), the Fundamental Research Funds for the Central Universities (GK202103117; GK202103118).

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  1. Northwest Institute of Historical Environment and Socio-Economic Development, Shaanxi Normal University, Chang’an Campus, No. 620, West Chang’an Avenue, Chang’an District, Xi’an, Shaanxi, 710119, People’s Republic of China

    Shaojian Chen & Hui Mao

  2. School of Management, Xi’an Jiaotong University, No. 28 West Xianning Avenue, Xi’an, Shaanxi, 710049, People’s Republic of China

    Junqin Sun

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  1. Shaojian Chen
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Chen, S., Mao, H. & Sun, J. Low-Carbon City Construction and Corporate Carbon Reduction Performance: Evidence From a Quasi-Natural Experiment in China. J Bus Ethics 180, 125–143 (2022). https://doi.org/10.1007/s10551-021-04886-1

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