Search Results (95)

Market-based instruments for environmental governance have emerged as a central pillar of China’s climate policy architecture, though their capacity to drive corporate green innovation continues to be the subject of active scholarly debate. Drawing on a staggered difference-in-differences identification strategy and a panel of Chinese A-share listed firms covering 2008 to 2023, this study evaluates the impact of China’s carbon emission trading scheme (CETS) pilot policy on firm-level green innovation. Our estimates indicate that the CETS pilot policy significantly increases green patent applications, a finding that proves robust for an extensive set of checks: parallel trends assessment, placebo exercises, PSM-DID estimation, alternative estimation strategies, and varied sample constructions. Heterogeneity analyses show that the innovation-enhancing effect is concentrated among firms operating in non-regulated industries and located in the western region, and that enterprises and regions endowed with stronger baseline carbon performance and higher pollution control investment display amplified responses. Mechanism analysis shows that the CETS pilot policy increases both operating costs and debt financing costs, yet these two cost channels exert opposite effects on green innovation. Operating costs drive innovation through cost-induced pressure, while financing costs inhibit innovation through a crowding-out effect. The net-positive effect suggests that the innovation-inducing effect of operating costs outweighs the innovation-inhibiting effect of financing costs. This study recommends maintaining stable carbon price signals, implementing complementary green finance policies, providing differentiated support for low-capability firms and regions, and accounting for spillover effects in policy evaluation. Full article

Drawing on a panel of Chinese A-share listed firms covering 2007 to 2024, we construct a firm-level measure of climate risk exposure based on textual analysis of annual reports. Employing a three-way fixed effects model combined with endogeneity corrections and a battery of robustness checks, we empirically identify the causal effect of climate risk on the cost of debt, as well as its underlying transmission mechanisms and heterogeneous boundary conditions. Our analysis yields three core findings. First, climate risk exerts a statistically significant and economically meaningful positive effect on the cost of debt, indicating that greater climate risk exposure amplifies firms’ debt financing burdens. Second, the impact operates through two parallel transmission channels. On the one hand, climate risk erodes corporate financial fundamentals by disrupting production and operations and elevating default risk. On the other hand, it damages non-financial reputation by triggering downgrades in Environmental, Social, and Governance (ESG) ratings and weakening long-term financing credibility. Third, the relationship between climate risk and the cost of debt is significantly moderated by firm- and industry-level characteristics: high-quality information disclosure attenuates the adverse financing impact of climate risk, while affiliation with heavily polluting industries strengthens this positive association. These findings remain robust to alternative measures of climate risk and the cost of debt, alternative clustering specifications, high-dimensional interactive fixed effects, and subsample tests with restricted sample windows. To address endogeneity concerns stemming from reverse causality and omitted variable bias, we adopt two complementary identification strategies: using one-period lagged values of the core explanatory variable and conducting instrumental variable estimation via two-stage least squares (2SLS). Estimates from both approaches remain statistically and economically consistent with our baseline results. Further heterogeneity analyses show that the cost-increasing effect of climate risk is more pronounced for firms without ESG fund ownership, non-state-owned enterprises (non-SOEs), and firms located in non-eastern regions of China. Overall, this study provides novel firm-level evidence on the microeconomic consequences of climate risk in emerging economies, develops a dual transmission framework integrating financial fundamentals and non-financial reputation, and offers actionable implications for policymakers, financial institutions, and firms to improve climate risk governance and optimize the financing environment amid the low-carbon transition. Full article

The transition toward renewable energy has accelerated globally in response to climate commitments and the need for sustainable energy systems, raising important questions about its fiscal implications. Focusing on India, this study investigates the relationship between renewable energy consumption and public debt while controlling for key macroeconomic factors, including economic growth, inflation, and non-renewable energy consumption. Using annual data from 1992 to 2022, the analysis employs the Autoregressive Distributed Lag (ARDL) model and Dynamic ARDL simulations to examine both short-run and long-run dynamics. In addition, Kernel-based Regularized Least Squares (KRLS) is applied to explore heterogeneous marginal effects and potential nonlinearities in the relationship between renewable energy expansion and government debt. The results reveal a time-dependent relationship between renewable energy consumption and public debt. In the short run, renewable energy expansion contributes to a reduction in public debt through efficiency gains and reduced dependence on fossil fuels. However, in the long run, renewable energy consumption exerts a positive and statistically significant impact on government debt, reflecting the substantial investment requirements associated with renewable energy infrastructure development. Economic growth consistently reduces public debt, while inflation provides only temporary relief in the short term. Robustness checks using FMOLS and DOLS confirm the stability of the long-run estimates. These findings highlight the importance of integrating renewable energy policies with prudent fiscal planning and expanding private investment mechanisms to support sustainable energy transitions. Full article

Cities in the Majority World face a widening climate investment gap that is often attributed to the absence of suitable financing instruments. Green bonds promise to mobilise private capital for low-carbon urban infrastructure, yet they have diffused unevenly, leaving the economies with the greatest needs at the market’s margins. This study asks whether macroeconomic constraints—the cost of finance, monetary instability, and public indebtedness—systematically shape green bond issuance across emerging and developing economies. We assemble an original panel of 24 such economies over 2015–2024 (240 country-year observations) and estimate pooled ordinary least squares (OLS), random-effects, two-way fixed-effects, Tobit, and probit models with robust standard errors. The public debt-to-GDP ratio is positively associated with issuance in most specifications, though the strength of this relationship varies across estimators and it is not statistically significant in the preferred two-way fixed-effects model; the renewable energy share is consistently positive, while consumer price inflation shows no significant suppressive effect. A probit model of the extensive margin shows that public debt, the renewable energy share, and income per capita raise the probability of issuing among the economies for which the data permit estimation. The four lower-income Sub-Saharan economies in the sample fall outside this estimation owing to missing data, yet record no issuance whatsoever over the decade—a descriptive pattern consistent with the structural barriers the model identifies. The findings challenge the assumption that monetary stabilisation is a precondition for climate finance, pointing instead to capital-market depth and subnational fiscal capacity as the more binding constraints. Full article

Sustainable innovation constitutes the cornerstone of firms’ long-term competitive edge, yet the underlying mechanisms via which patient capital facilitates corporate sustainable innovation remain understudied. Based on a sample of Chinese A-share listed firms spanning 2013 to 2024, this study operationalizes patient capital through two proxies: relational debt and stable institutional ownership. We systematically investigate the impact of patient capital on sustainable innovation, alongside the mediating pathway of internal control quality and the moderating role of climate policy uncertainty. The empirical outcomes indicate that both forms of patient capital exert a significant positive effect on sustainable innovation, with internal control quality serving as a partial mediator in this relationship. Additionally, climate policy uncertainty reinforces the promotional influence of patient capital on sustainable innovation. We further stratify heterogeneity analyses into two dimensions: firm-inherent heterogeneity and external environmental heterogeneity. From the perspective of endogenous firm attributes, the innovation-stimulating effect of patient capital differs markedly across enterprises with distinct ownership types, life-cycle stages, and total asset sizes. Externally, the observed positive impact varies considerably conditional on industrial factor intensity and the regional marketization degree of the firm’s location. These findings expand the existing literature concerning long-term capital and sustainable innovation, and yield actionable implications for corporate management, institutional investors, and policymakers. Full article

The increasing frequency of extreme weather events, particularly hailstorms, driven by climate change, poses growing threats to the resilience, environmental sustainability, and long-term performance of photovoltaic (PV) systems. This study evaluates the environmental impacts of a 12 kWp rooftop PV installation in Brescia, northern Italy, through a comparative Life Cycle Assessment (LCA) of three system configurations: a standard unprotected system (Scenario A), one equipped with a retractable polycarbonate hail-protection panel with automated weather-sensor activation (Scenario B), and one using thicker reinforced front-glass modules (Scenario C). The analysis follows a cradle-to-gate plus operational maintenance phase (30-year horizon, excluding end-of-life) system boundary and employs the ReCiPe 2016 Midpoint (H) methodology across 18 environmental impact categories. A novel integration of the Social Discount Rate (SDR) to the LCA framework—constituting a Discounted LCA (D-LCA)—incorporates both temporal discounting and risk dimensions into the environmental evaluation. A structured PESTEL-based risk taxonomy is applied to derive scenario-specific SDRs, with the Environmental risk category as the key differentiator between configurations. The static LCA identifies Scenario A as the lowest-impact option, while the D-LCA framework reverses this ranking: Scenario C achieves the highest Net Present Value of Emissions, followed by Scenario A. A negative NPV-E for Scenario B reflects the temporal cost of a large, front-loaded construction debt rather than absolute environmental harm. D-LCA framework should be interpreted as a complement to the full 18-category static LCIA profile, not a replacement. These results demonstrate that risk-informed D-LCA provides a more policy-relevant environmental sustainability assessment than static LCA for long-lived energy infrastructure subject to climate-driven operational risks. Full article

Technical debt (TD) poses a significant systemic risk in aerospace systems engineering, yet existing frameworks inadequately address debt irreversibility at hardware–software integration boundaries. Current detection approaches operate on structured code artifacts rather than the unstructured test and evaluation (T&E) documentation where integration debt often becomes visible. This paper presents the Technical Debt Management Framework (TDMF), a proof-of-concept architecture for identifying, quantifying, and prioritizing TD across the systems engineering lifecycle. The TDMF proposes an integrative architecture combining leading indicator (LI) monitoring with an AI detection module using large language model (LLM) analysis to surface debt indicators within unstructured aerospace documentation. The framework is grounded in a systematic review of 143 publications and illustrated through retrospective application to the Hubble Space Telescope and Mars Climate Orbiter failures, with an Evidence Traceability Matrix bounding historical claims against hindsight bias. An initial pilot evaluation of the ATLAS prototype—conducted on a single-program aerospace T&E documentation using GPT-4 with expert annotation—yielded a preliminary F1 score of 0.82 and an observed 45% reduction in median review time, providing initial evidence of computational feasibility within that scope. The framework is positioned as an early-stage design-science artifact at Technology Readiness Level 2–3. Prospective multi-program validation constitutes the required next study. This work contributes a proof-of-concept management architecture, a documented prompt engineering approach for TD classification, and a structured research agenda for empirical validation for TD classification in mission-critical systems engineering. Full article

Rising climate policy uncertainty increases the complexity of firms’ financing decisions, particularly for Specialized, Refinement, Differential, and Innovation (SRDI) enterprises that rely heavily on external financing. Accordingly, using data on 262 SRDI firms from 2011 to 2023, this paper conducts empirical analysis to systematically examine the relationship between climate policy uncertainty and SRDI firms’ equity financing decisions. We find a significant inverted U-shaped relationship between climate policy uncertainty and the equity financing ratio of SRDI firms. When uncertainty is low to moderate, firms are more inclined to raise the proportion of equity financing to preemptively lock in capital; however, as uncertainty rises further, valuation discounts and financing frictions intensify, thereby suppressing equity financing. These conclusions remain unchanged after a series of robustness checks. Mechanism tests indicate that climate policy uncertainty affects equity financing mainly through two channels: higher debt financing costs and lower firm value. The former encourages substitution from debt-to-equity financing, whereas the latter suppresses equity financing by increasing its implicit costs. Further heterogeneity analyses show that this effect is more pronounced among private firms, firms in more highly concentrated industries, and firms with weaker risk resilience. Our findings inform innovative firms’ financing decisions and sustainable development under climate policy uncertainty. Full article

This study was conducted to investigate the impact of climate change disclosure on the cost of debt and gain deep insight into the usefulness of political connections and ESG disclosure for reducing the cost of debt. A sample of 83 listed firms in the Egyptian context, spanning 498 observations over 6 years from 2018 to 2023, was used. A quantitative approach was adopted to examine the key hypotheses. This research reveals that climate change disclosure decreases the cost of debt. Furthermore, political connections and ESG disclosure moderate the main nexus. Multiple robustness checks were conducted to confirm these findings. Crucial policy implications for regulators, investors, and sustainability experts were developed by highlighting the latest practices of corporations aligned with achieving Sustainable Development Goals. The significance of this study lies in filling several gaps in the literature regarding climate change disclosure, political connections, and ESG disclosure and how a company’s strategic approach can impact the cost of capital. Full article

To address escalating climate challenges, China has implemented a multi-tiered low-carbon policy framework aimed at achieving carbon peaking and carbon neutrality, profoundly reshaping firms’ strategic and financial behaviors. Using a panel of Chinese listed firms from 2007 to 2022, this study examines how low-carbon policies affect corporate earnings management choices and the underlying mechanisms. The results show that low-carbon policies significantly restrain accrual-based earnings management while simultaneously promoting real earnings management, indicating a clear substitution effect; these findings remain robust across multiple robustness checks. Mechanism analyses reveal that rising financing costs and enhanced digital transformation induced by low-carbon policies curb accrual-based earnings management, whereas increased financial risk and weakened debt-paying ability stimulate real earnings management. Further heterogeneity analyses suggest that the inhibitory effect on accrual-based earnings management is stronger among firms subject to greater analyst coverage and media scrutiny, while the shift toward real earnings management is more pronounced among firms with weaker profitability and those located in regions with lower innovation capacity. Overall, this study deepens the understanding of the microeconomic consequences of low-carbon policies and provides policy-relevant insights for refining green regulatory frameworks and promoting sustainable corporate development. Full article

Ornamental horticulture represents one of the dominant pathways for the introduction of alien plant species and has played a central role in shaping current and future invasion dynamics. Many ornamental plants escape cultivation after long lag phases, driven by high propagule pressure, human-mediated selection of functional traits, and increasing climatic suitability. As a result, ornamental species contribute substantially to Europe’s invasion debt, with many future invasions already “locked in” under ongoing global change. In this review, we synthesize current knowledge on the invasive risk of ornamental plants in Europe, examining introduction pathways, biological traits promoting invasiveness, the role of climate change, and the ecological, economic, and social impacts associated with ornamental plant invasions. We highlight that beyond biodiversity loss, invasive ornamental plants pose underappreciated threats to agriculture and related activities, including increased management costs, weed problems in managed landscapes, and disruption of water management and irrigation infrastructure, particularly through invasive aquatic species. We further review tools for risk assessment and prevention, including weed risk assessment frameworks, green lists, horizon scanning, and climate-informed spatial forecasting, emphasizing the importance of proactive, pathway-based approaches. Where prevention fails, management of established invasive ornamentals relies on integrated strategies combining mechanical, chemical, and biological control, often generating large quantities of biomass and long-term economic costs. We discuss the emerging but still limited potential of invasive plant biomass valorization as a complementary management option, highlighting both opportunities and constraints. Finally, we discuss implications for horticultural practices, policy development, and future research, arguing that reconciling ornamental horticulture with biodiversity conservation and sustainable agriculture will require anticipatory governance, stakeholder engagement, and climate-aware decision-making. By aligning horticultural innovation with invasion risk awareness, it may be possible to reduce future invasions while maintaining the social and economic benefits of ornamental plant use in Europe. Full article

Global climate policy requires constant attention due to shifting interests and alliances between national negotiators. Whether represented at global or national scales, three universal features of fused climate policy conjoin the wealthy and emerging G20 economies that are historically responsible for the most greenhouse gas emissions. The former are represented by G7 Western powers—the United States, Europe, United Kingdom, Japan, and Canada—and the latter are centered on the fast-expanding ‘BRICS’ bloc: Brazil–Russia–India–China–South Africa (2010–2023), new members Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates, and potentially also Saudi Arabia (a member invitee), along with ten new ‘partners’ designated in 2024, many of which have carbon-intensive economies. Although conflicts regularly arise—especially over emissions-related trade policy and climate financing—and although Donald Trump’s exit from United Nations climate politics profoundly disrupted the usually coherent G7 bloc, the consensual principles uniting these diverse Western and BRICS governments at multilateral climate summits include the following: (1) not cutting corporate, state, and household emissions to the extent necessary for avoiding unmanageable planetary disasters, in the process denying effective ways of leaving fossil fuels underground (by reimbursing poor countries); (2) not pricing carbon properly or acknowledging their economies’ ‘climate debt’; and (3) instead promoting carbon trading and offset mechanisms. The implications are important for alliance-formation involving climate-victimized, low-income countries and climate justice activists, alike. In sum, there is an increasingly urgent rationale to transcend ‘Global North’ and ‘Global South’ dichotomies and instead consider climate (like many other aspects of G7-BRICS relations) with a perspective open to critique of the imperial–subimperial fusions, not only oft-assumed frictions. Full article

The growing relevance of sustainable finance has positioned green bonds as central instruments in debates on how capital markets can contribute to climate transition while creating value for firms. This article conducts a literature review to examine the relationship between green bond issuance, corporate financial performance, and the cost of debt. Using the PRISMA 2020 protocol, 59 articles published between 2019 and 2025 were identified and classified according to study type, methodological approach, analytical technique, sectoral and geographic focus, and performance indicators. A bibliometric analysis was also performed to map publication trends, research clusters, and thematic evolution. The results indicate a fragmented but expanding field, with most studies concentrated in developed markets, especially Europe, the United States, and China, and limited evidence from emerging economies. Empirical findings converge on modest but heterogeneous financial benefits, frequently reflected in the so-called “Greenium,” typically ranging between 1 and 63 basis points. Accounting-based effects on profitability (ROA, ROE) remain mixed, while econometric/regression, panel analysis and event studies dominate the empirical landscape. The paper’s incremental contribution lies in consolidating these quantitative insights into a reproducible classification framework that enables systematic comparison between developed and emerging markets, supporting future research on long-term financial and sustainability outcomes. Full article

The global fight to mitigate greenhouse gas emissions and address climate change demands that firms implement energy-saving strategies while maintaining firm financial performance. However, the impact of energy efficiency on corporate financial performance remains underexplored, especially in South Africa. This study applied a two-step system generalized method of moments (SGMM) to explore the impact of energy efficiency on the financial performance of higher polluters and emitters listed on the Johannesburg Stock Exchange (JSE) over the period from 2015 to 2023. The sample for the study was 58 companies listed on the JSE. The data was sourced from the firm’s annual reports covering the period of 9 years (2015–2023). Our study reveals no significant association between energy-saving strategies and firm financial performance within high-polluting and emitting firms listed on the JSE. Notably, the study reports that leverage positively affects both firm profitability and market valuation, suggesting that debts may serve as a dynamic capability for improving firm performance if it is used strategically. Our findings underscore the importance of mandatory independent assurance of ESG reports to mitigate greenwashing risks. Full article

This study tests whether labeled green and sustainability-linked financing complements firms’ R&D to lower the weighted average cost of capital (WACC), raise valuation, and shift innovation toward climate mitigation technologies. Using a 2012–2024 panel of S&P 500 constituents with complete coverage, this study applies a staggered-adoption difference-in-differences design with interaction-weighted event-time estimators and entropy balancing; WACC is decomposed into equity and debt components, valuation is measured by Tobin’s Q, and innovation outcomes cover patent counts and the CPC Y02 share, with matched-bond and secondary-market comparisons for the debt channel. Within two years of first-time adoption, this study observes a meaningful decline in WACC (approximately 40–60 bp) driven mainly by the cost of debt, alongside higher valuation and increased innovation intensity with a larger Y02 share. Effects are larger where R&D intensity is higher and are strongest for use-of-proceeds green bonds and for sustainability-linked contracts with material KPIs and non-trivial step-ups. These results indicate that labeled financing is most effective when aligned with credible R&D pipelines and verification mechanisms, clarifying its governance role in corporate sustainability strategies. Full article