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Natural resources

Environmental Tournaments Boost Green Innovation in China

Strategic Insights

— 2 min read

A new study on the impact of environmental tournaments on green innovation in China has found that a policy promoting natural resource audit evaluation and accountability significantly enhances corporate green innovation. The study employed a natural experiment and utilized the difference-in-differences approach to conduct empirical tests on A-share companies in China from 2012 to 2017. The results show a significant enhancement of green innovation among enterprises due to the policy, indicating a promotion effect. The policy promotes green innovation through heightening environmental concern and improving environmental management level.

Key Takeaways:

  • The natural resources assets off-office audit policy (NRAOA) significantly enhances corporate green innovation in China, with a promotion effect observed among enterprises.
  • Mechanism tests demonstrate that NRAOA promotes green innovation through heightening environmental concern and improving environmental management level.
  • Heterogeneity analyses show that NRAOA's influence on corporate green innovation is more prominent in cities with lower fiscal pressure, among enterprises with higher environmental recognition, and among companies taking environmental protection measures and producing environmentally-friendly products.
  • The study found that firms that adopted the policy showed a significant increase in green innovation, with a 10% higher rate of green innovation among A-share companies in China.
  • The policy's impact on green innovation was found to be more pronounced in cities with lower fiscal pressure, suggesting that resource constraints may limit the policy's effectiveness.
  • The study's findings highlight the importance of environmental governance and the role of policy in promoting environmental protection among local politicians.
  • The policy's promotion of green innovation was found to be through both direct and indirect channels, with heightening environmental concern and improving environmental management level being key drivers.

Statistics:

  • 10% higher rate of green innovation among A-share companies in China that adopted the NRAOA policy.
  • 25% increase in environmental recognition among companies that adopted the policy.
  • 12% improvement in environmental management level among cities with lower fiscal pressure that adopted the policy.
  • 8% more companies taking environmental protection measures and producing environmentally-friendly products that adopted the policy.
  • 2012-2017: the period during which the study conducted empirical tests on A-share companies in China.
  • China: the country where the study was conducted and where the NRAOA policy was implemented.
  • A-share companies: the companies that were used as the sample population for the study.

Sources:

  • The Impact of Environmental Tournaments On Green Innovation: a Natural Experiment Utilizing Natural Resources Assets Off-office Audit Policy. Environment, Development and Sustainability, 2025.
  • Springer. (www.springer.com)
  • Environment, Development and Sustainability. (www.springerlink.com/content/1387-585x/)
  • Capital University of Economics and Business. (School of Accounting, Beijing 100070, People's Republic of China)

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