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Sustainability
Volume 18
Issue 10
10.3390/su18105082
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Article

Environmental Provisions in Trade Agreements and Corporate Green Innovation Theory and Mechanisms

by
Xinheng Liu
1,
Xue Peng
1,
Lei Li
1,
Qi Ban
2 and
Zheng Xue
2,*
1
Business School, Guilin University of Technology, Guilin 541104, China
2
School of Finance, Nankai University, Tianjin 300350, China
*
Author to whom correspondence should be addressed.
Sustainability 2026, 18(10), 5082; https://doi.org/10.3390/su18105082 (registering DOI)
Submission received: 27 March 2026 / Revised: 6 May 2026 / Accepted: 11 May 2026 / Published: 18 May 2026
Versions Notes

Abstract

Green innovation is vital for the sustainable economic development of countries. One effective way to protect the environment and promote sustainable economic development is through corporate green innovation. This paper uses data from Chinese listed companies and the Trade and Environment Database, which covers the period from 2013 to 2024, to examine how environmental regulatory provisions in trade agreements affect green innovation among Chinese enterprises and the underlying mechanisms. The study finds that environmental provisions in trade agreements can greatly encourage firms to innovate in a green way. This conclusion remains unchanged after a series of robustness tests. Analysis of the mechanisms reveals that environmental provisions in trade agreements inhibit firms’ green innovation through compliance costs, while promoting it through innovation compensation effects. However, the latter outweighs the former. Analysis of heterogeneity suggests that environmental legislation has a greater impact on green innovation within highly innovative, heavily polluting, non-state-owned, unauthorised firms.
Keywords: trade agreements; environmental provisions; green innovation; sustainable development trade agreements; environmental provisions; green innovation; sustainable development

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MDPI and ACS Style

Liu, X.; Peng, X.; Li, L.; Ban, Q.; Xue, Z. Environmental Provisions in Trade Agreements and Corporate Green Innovation Theory and Mechanisms. Sustainability 2026, 18, 5082. https://doi.org/10.3390/su18105082

AMA Style

Liu X, Peng X, Li L, Ban Q, Xue Z. Environmental Provisions in Trade Agreements and Corporate Green Innovation Theory and Mechanisms. Sustainability. 2026; 18(10):5082. https://doi.org/10.3390/su18105082

Chicago/Turabian Style

Liu, Xinheng, Xue Peng, Lei Li, Qi Ban, and Zheng Xue. 2026. "Environmental Provisions in Trade Agreements and Corporate Green Innovation Theory and Mechanisms" Sustainability 18, no. 10: 5082. https://doi.org/10.3390/su18105082

APA Style

Liu, X., Peng, X., Li, L., Ban, Q., & Xue, Z. (2026). Environmental Provisions in Trade Agreements and Corporate Green Innovation Theory and Mechanisms. Sustainability, 18(10), 5082. https://doi.org/10.3390/su18105082

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