Environmental information disclosure and green innovation: examining the connection

Abstract

Purpose This study investigates how environmental information disclosure (EID) incentivizes corporate green innovation through dual pathways: executive green awareness and green management innovation. While existing literature has explored the relationship between EID and corporate environmental performance, limited research has addressed potential adverse effects such as symbolic compliance and innovation bubbles or examined the internal governance mechanisms through which EID fosters substantive green innovation. Design/methodology/approach Utilizing a sample of Chinese A-share listed companies from 2008 to 2022, data on environmental information disclosure and green innovation were collected from the CNRDS and CSMAR databases. Multiple regression models with instrumental variables, Heckman selection models and PSM-DID techniques were employed to address endogeneity concerns and empirically examine the impact of EID on both the quality and quantity of corporate green innovation. Findings Results indicate that EID significantly promotes both the quality and quantity of corporate green innovation. Mechanism analysis reveals that executive green awareness mediates the relationship between EID and both dimensions of green innovation, while green management innovation uniquely enhances innovation quality without significantly affecting innovation quantity. Heterogeneity analysis demonstrates that firm characteristics such as size, ownership structure and market position moderate the effectiveness of EID in promoting green innovation. Research limitations/implications This study has several limitations. First, the sample is confined to Chinese A-share listed companies (2010–2022), potentially limiting cross-contextual applicability due to China’s unique institutional environment and the coincidence with a transitional period in environmental policy. Second, the theoretical model may omit important mediators beyond green awareness and green management innovation and residual endogeneity issues may persist despite methodological precautions. Future research should expand to cross-national samples, explore additional mediating mechanisms like environmental legitimacy, employ diverse methodological approaches including qualitative case studies and investigate how specific policy design features and their interactions with other instruments shape EID effectiveness. Practical implications The findings suggest that regulatory authorities should establish more stringent and specific EID standards with enhanced third-party verification mechanisms to prevent symbolic compliance. Additionally, differentiated disclosure guidelines based on firm characteristics could improve policy effectiveness. Given the significant impact of green management innovation on innovation quality, policymakers should encourage firms to strengthen internal green management systems and obtain environmental management certifications, thereby supporting national carbon neutrality objectives. Social implications The findings underscore how robust environmental information disclosure mechanisms can catalyze substantive corporate green transformation beyond mere symbolic compliance. As nations worldwide navigate sustainability challenges, properly designed disclosure frameworks can be leveraged as effective governance tools to address market failures in environmental innovation. When implemented with appropriate verification systems and tailored to specific organizational contexts, these mechanisms not only enhance corporate environmental responsibility but also contribute to broader societal goals such as climate change mitigation, resource conservation and sustainable economic development – ultimately fostering the social welfare enhancements inherent in public goods provision. Originality/value This study contributes to the sustainable development literature by systematically examining the multidimensional impact mechanisms of EID on corporate green innovation and providing evidence-based policy recommendations for promoting substantive green transformation in enterprises.

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