1. Introduction
China’s 14th Five-Year Plan proposes the promotion of the construction of ecological civilization, which emphasizes green development and the coexistence of humans and nature. Enterprises, as major contributors to environmental pollution, are responsible for preventing pollution, protecting the ecological environment, and working toward carbon peaking and carbon neutrality goals. However, the ecological environment, as a public good, poses externalities and social burdens in terms of environmental pollution control costs. This situation often leads to a lack of motivation for enterprises to invest in environmental protection and governance [
1]. The green investment (GI) by enterprises plays a crucial role in driving green development and ensuring sustainability [
2,
3]. Currently, the scale of GI by Chinese enterprises falls short [
4,
5], with GI in 2022 accounting for only 1.5% of the country’s GDP. This amount barely meets the minimum international standard for environmental protection expenditure to control environmental degradation. Therefore, determining the way to incentivize enterprises to actively mitigate pollution and increase their level of GI is crucial.
The Chinese government has actively promoted a green financial system and introduced various green finance (GF) policies in recent years. One important policy is the implementation of the GFRI in 2017. Extensive research has shown that this GFRI significantly impacts energy efficiency, green innovation, debt financing costs, and financialization level [
6,
7,
8,
9,
10,
11]. The core measures of the policy include developing diversified financing tools such as green credit, green bonds, and green insurance to expand financing channels for green projects. An information platform has also been established to provide data on corporate pollution emissions, violations, and participation in environmental pollution liability insurance. This platform enhances accountability for environmental responsibility. GFRI aims to broaden financing channels for green funds, establish comprehensive corporate environmental responsibility disclosure, and encourage social capital involvement in green project investments to achieve sustainable development goals for enterprises [
8,
10]. Scholars have studied the influencing factors of GI from the nature of property rights, green management, corporate governance, and senior managers’ characteristics. For example, the level of GI of state-owned enterprises is higher than that of other enterprises, which indicates that the GI scale of enterprises has significant property rights heterogeneity [
12]. In terms of green management and corporate governance, research shows that enterprises’ advocacy of green culture, the implementation of environmental management systems, and equity incentives can promote GI [
13,
14]. In terms of executives’ characteristics, Yacob et al. (2019) found that executives’ green awareness can help enterprises improve GI [
15]. However, research on the microlevel impact of GFRI on enterprise green transformation, specifically in terms of GI, is lacking.
GFRI represents a form of market-based environmental regulation (ER). The relationship between ER and corporate GI has been extensively investigated in the academic field, which yields three different categories of literature. The first category, which is based on the Porter hypothesis, suggests that appropriate increases in ER intensity by the government not only can reduce environmental pollution but also can stimulate technological progress and enhance green efficiency, which motivates companies to increase their GI voluntarily [
16,
17,
18,
19,
20,
21]. The second category of literature argues that a negative relationship exists between ER and corporate GI [
22,
23,
24,
25]. Orsato (2006) suggests that companies need to allocate significant human and financial resources to undertake GIs in the short term, which may not yield corresponding economic benefits. This situation ultimately causes companies to lose their motivation for GI [
21]. The third category of literature argues that significant uncertainty exists in the internal and external environment of enterprises, such as the uncertainty of the game between polluting enterprises and the government and the mismatch between the timing of ER implementation and the life cycle of enterprises [
26,
27,
28]. The literature has verified the effect of GF policy on restraining the expansion of backward production capacity in heavily polluting industries. However, little attention has been given to the effect of GF policy on guiding heavily polluting enterprises to achieve green transformation. The questions to be addressed in this work are as follows: Will GFRI increase the GI of enterprises, which forces them to undergo green transformation? What are the microchannels through which GFRI affects the GI of enterprises? Will GFRI generate heterogeneity in the GI of different enterprises? Can GFRI increase the market competitiveness of enterprises by enhancing their GI? In recent years, more and more developed and emerging economies have been promoting the construction of green finance markets, constructing a green finance development system, and expanding financing channels for green enterprises and projects to achieve the goal of sustainable development. This study can provide a reference for other countries to build green financial systems.
Compared with the previous literature, this study makes several contributions. First, this work establishes a connection between market-based ER and corporate GI by treating the implementation of GFRI as a quasi-natural experiment. We test the effectiveness of the GFRI and provide theoretical support for further improving and replicating the GFRI. Second, this research analyzes the mechanism through which GFRI enhances corporate GI, which demonstrates that expanding the financing channels for green funds and establishing a comprehensive mechanism of corporate environmental responsibility information disclosure are crucial channels through which GFRI promotes corporate GI. Third, this study enriches the research on the influencing factors of GI and provides a new perspective for enhancing GI, which is practically important for promoting enterprise green transformation. Compared with traditional ER measures [
29,
30,
31,
32], the distinctive feature of GFRI lies in leveraging market-oriented means, encouraging more social capital to invest in green projects through the effective allocation of financial resources, and serving as an effective measure to stimulate enterprises’ GI.
2. Policy Background and Research Hypothesis
2.1. Policy Background
In response to the people’s yearning for a beautiful ecological environment, the Chinese government has continued to promote the construction of ecological civilization. Thus, ecological civilization is present in a series of major strategic deployments. Green development is the main content of ecological civilization construction. In August 2016, GF was first defined at the national level in the Guiding Opinions on Building a Green Finance System issued by the Chinese government. GF can improve the environment, reduce pollution, and achieve efficient conservation and the rational use of resources. In June 2017, China built distinctive GFRI in the Zhejiang, Jiangxi, Guangdong, Guizhou, Xinjiang, and Gansu provinces.
The pilot areas have different levels of economic development, industrial structures, resources, environmental carrying capacities, and resource endowments. This difference indicates that these pilot areas have a certain representativeness. Each pilot area has its own emphasis on the development of GF. Based on the implementation of the “Belt and Road” policy, Xinjiang is positioned to strengthen the financial support of GF for modern agriculture and clean energy through green development. Xinjiang plans to gradually increase the proportion of GF tools in the social financing scale within 5 years and reduce the loan scale and proportion of industries with high pollution and industrial surplus annually. Based on the implementation of big data technology, Guizhou Province is positioned to support the construction of projects and infrastructure related to the ecological environment and poverty alleviation projects through GF and ultimately form a wide coverage and powerful GF service system. Guangdong Province is positioned at the GF cooperation among Guangdong, Hong Kong, and Macao and mainly develops the GF market. Jiangxi Province is positioned at the diversified development of the GF system and enriches the variety of GF products. Zhejiang Province is positioned to increase the scale of green financing through innovation of the GF system, mechanisms, and products to support the green transformation of traditional industries. The development of GF has played a positive role in environmental governance and economic finance in the environment where countries all over the world are striving to seek the path of sustainable economic development.
2.2. Research Hypothesis
The GFRI can fully exploit institutional advantages, mainly in two ways, to help enterprises improve their GI. One is to provide all-round convenient services for the declaration and financing of environmental protection projects. The other is to limit industrial projects of high pollution through the establishment of pollution discharge, environmental illegal blacklist, and other ways. Under the dual effects of positive incentives and negative punishments, enterprises will increase their necessary environmental investment and fully fulfill their social responsibilities.
This study analyzes the effect of GFRI on enterprises’ GI from the following two aspects. First, information asymmetry theory posits that a perfect green credit system and credit policy evaluation mechanism are conducive to motivating enterprises to engage in GI. Specifically, the establishment of a GF full-chain environmental information disclosure mechanism and green credit evaluation mechanism in the pilot area can force enterprises to engage in GI. The GFRI incorporates enterprises’ green information, environmental violations, and participation in environmental pollution liability insurance into the national credit information sharing platform and enterprise credit system. This can alleviate the information asymmetry between internal and external stakeholders, which attracts more social capital to green projects and is conducive to the public’s external supervision function. Thus, the reputational risk faced by enterprises is increased, and these enterprises are prompted to improve their environmental performance. On the other hand, GFRI links the environmental performance of enterprises with the credit policy evaluation mechanism, embeds green criteria in the credit investigation and review process, and restrains the blind expansion of highly polluting enterprises by means of differentiated credit policies that inhibit their credit demand and raise debt financing costs [
4]. It also opens up green channels for enterprises’ green projects and focuses on meeting energy-saving, environmental protection, and green technology projects. As a result, the environmental performance of enterprises is improved. In the pilot region, if an enterprise exceeds the pollution emission standards or commits environmental violations such as environmental pollution, then it will be included in the blacklist of the environmental protection department. This situation will also convey negative environmental news about the firm to the capital market, which could damage the firm’s reputation and value. Thus, the poor environmental performance of an enterprise can reduce investors’ recognition of the enterprise’s sustainability potential, increase barriers to credit, reduce credit limits, and negatively affect the long-term career development of the company’s management. On the contrary, the good environmental performance of companies can effectively increase the value of listed companies, enable access to more credit resources, and lower financing costs. Therefore, when the management encounters the strict environmental information disclosure mechanism and external monitoring mechanism of GFRI, it will actively make GI for preventive motives and actively guide the company to optimize green technology, reduce pollution emissions, and mitigate the negative social externalities caused by production and operation activities. The management can conduct these activities by acquiring energy-saving and emission-reducing equipment or technological renovation.
Second, the GFRI provides diversified green capital financing channels for the technological transformation of enterprises, improves the convenience of financing, and helps promote the GI activities of enterprises. GI is a special investment activity that contributes economic and environmental benefits. In the long term, GI is conducive to improving the energy use efficiency of enterprises, establishing a long-term mechanism for energy conservation and emission reduction, and enhancing the sustainable development capacity of enterprises. In terms of the environmental benefits of GI, if a company wants to achieve environmental benefits in the short term, then it needs to invest high amounts of R&D capital. Therefore, GI has a long investment cycle and faces high uncertainty, which leads to the lack of enthusiasm of enterprises to make GI. The district implementation plan of the GFRI enables the establishment of perfect green industry financing channels in the pilot area and actively guides the flow of social resources to green projects. The pilot areas will open up green channels for green enterprises through diversified financing channels such as green credit, green development funds, and equity pledge financing in regional equity markets. Therefore, GFRI improves the availability of green funds for enterprises, provides whole-chain financial services for green enterprises, and encourages projects focused on green industries and technological transformation. GFRI also provides enterprises with green technological innovation and green transformation projects of traditional industries with sufficient financial support. GFRI can guide various types of social capital to enter the green financial market, effectively alleviate the financing constraints faced by enterprises in conducting GI, improve the convenience of financing when enterprises perform green projects, and optimize the debt structure. Therefore, the diversified financing channels of the GFRI policy provide financing convenience for GI activities of enterprises. This situation motivates them to conduct green technological transformation and achieve the win-win goal of business development and environmental protection.
On the basis of the abovementioned analysis, this study hypothesizes that the GFRI is conducive to improving the enterprises’ GI.
5. Conclusions, Policy Implications and Limitations
5.1. Conclusions
Developing a low-carbon economy is an inevitable choice for many countries. Under the current economic situation in China, traditional industries are still an important component of the national economy, and some heavily polluting enterprises cannot be completely replaced. However, environmental protection is urgent. Therefore, it is particularly important to find a method that can not only improve the level of environmental protection but also achieve economic restructuring. Determining whether the GFRI promotes the GI of enterprises is practically important for China to achieve the “double carbon” goals early. We used a DID model to examine the effect, mechanism, and heterogeneity of GFRI on GI by using the data of listed enterprises from 2011 to 2020. This paper draws the following conclusions. First, the research hypothesis of this study, that is, GFRI can promote the improvement in the GI of enterprises, has been verified. Second, the GFRI promotes the GI of enterprises by enhancing reputational costs and loan scale. Third, the GFRI is more conducive to improving the GI of SOEs, enterprises with high FC, enterprises in regions with high ER intensity, and enterprises with executives’ financial backgrounds. Fourth, the improvement in GI can further enhance the value of enterprises after the implementation of GFRI. This study enriches the literature in the field of evaluating the effectiveness of GFRI and provides a decision-making reference for improving the design of GFRI and promoting the realization of dual carbon goals.
5.2. Policy Implications
On the basis of the abovementioned research conclusions, we propose the policy implications:
First, this study finds that green finance can promote enterprises’ GI, indicating the effectiveness of GFRI. The government should actively play a guiding role, accelerate the construction of the GF system, continue to promote the establishment of GFRI, and expand the scope of GFRI under the strategic objectives of carbon neutrality and carbon peak. The government should also increase the support of green funds, stimulate the willingness of enterprises to undergo green transformation and development, and provide sufficient financial support for the technological transformation and production process improvement of heavily polluting enterprises. The other suggested tasks for the government are stimulating the enthusiasm of enterprises for GI and realizing high-quality development. In addition, for developing countries, they can learn from China’s approach and implement green finance policies to promote the sustainable development of their green enterprises.
Second, this study finds that the GFRI promotes the GI of enterprises by enhancing reputational costs and loan scale, indicating financing constraints and reputation costs are the intermediary channels through which GFRI affect GI. The government needs to improve the supporting mechanism of GF and fully exploit the policy effect of GF. On the one hand, the government should strengthen the construction of green information sharing platforms and credit evaluation systems for enterprises, improve the pricing mechanism of green information, and enhance the green reputation risk and transparency of green information for enterprises. On the other hand, the government can launch diversified financing channels within the pilot zone, improve the financing convenience of green funds, alleviate corporate financing constraints, and provide sufficient financial support for GI by enterprises.
Third, the government can establish a green fund monitoring mechanism to strictly control the use of green funds and reduce the risk of GF. The government formulates a unified green project catalog and green fund monitoring mechanism to accurately evaluate the environmental protection attributes and expected environmental and social benefits of different green projects of enterprises. This mechanism also prevents the risk of polluting enterprises obtaining green funds through falsification and false reporting of environmental performance and ensures that social capital truly flows to green projects for promoting the green transformation and development of polluting enterprises.
Fourth, the perception of enterprise managers directly impacts the formulation and decision making of enterprise strategies. Executives with strong environmental awareness also play an extremely important role in the long-term development of the enterprise. The improvement in GI can further enhance the value of enterprises after the implementation of GFRI, which means that enterprises will gain considerable economic benefits after increasing GI. So, enterprise executives should prioritize GI at a strategic level and gradually form a green and low-carbon corporate culture. They should truly integrate it into the process of sustainable development of the enterprise. Senior managers of enterprises should also closely monitor the changes in carbon regulatory direction and social environmental awareness, grasp the development trends of the industry, and adjust enterprise strategies in a timely manner. They should also seize the opportunities brought by policy changes, enhance their market competitiveness through GI, and then bring them first-mover advantages. This way opens up a new path of green development.
5.3. Limitations
Different pilot areas have adopted different green financial tools when implementing GFRI. Green financial tools include green credit, green bonds, and green insurance. Their roles in GI of enterprises are different, which is worthy of in-depth study. Owing to the lack of indicator data to measure green financial tools at the enterprise level, this study can only investigate the effect of GFRI on GI. In the future, this study will collect data on different green financial tools in different regions to specifically evaluate the heterogeneity effects of different green financial tools.