Is corporate green investment a determinant of corporate carbon emission intensity? A managerial perspective

Abstract

In recent years, the swift growth of industrialization and globalization has exacerbated serious problems, such as climate change resulting from carbon emissions. As the largest carbon emitter globally, China is striving to explore a low-carbon economic transition path to alleviate environmental issues and ensure long-term development. The relevance of investing in green projects is highlighted in the UN's Sustainable Development Goals. Exploring the effects of green investments on carbon emissions by Chinese companies and the dynamics between the two is crucial for China's green transition. This study investigates whether companies can reduce their carbon emissions per unit of activity by investing in green projects. Additionally, it evaluates how management decisions influence the effectiveness of these investments in reducing emissions. The study samples firms from the Stock exchanges in Shanghai and Shenzhen for the period 2010-2020. Data are obtained from the China Stock Market and Accounting Research (CSMAR) and DIB, etc. Findings indicate that firms can reduce their corporate carbon emissions by increasing their green investments. Furthermore, factors like management shareholding, etc help strengthen the link between corporate green investment and carbon intensity. This study not only enhance the theoretical comprehension of the link between green investment and carbon emission reduction but also enriches stakeholder theory. The instrumental role of management in urging firms to decrease their carbon emissions via green investments is evident in practice, offering a roadmap for businesses to prioritize green investment choice and create a pathway to a carbon-neutral economy.