Welcome to Francis Academic Press

Academic Journal of Business & Management, 2026, 8(3); doi: 10.25236/AJBM.2026.080303.

The Impact of Climate Risks on Corporate Green Governance: Evidence from China

Author(s)

Mule Tai

Corresponding Author:
Mule Tai
Affiliation(s)

School of Business Administration, Inner Mongolia University of Finance and Economics, Hohhot, 010070, China

Abstract

Against the backdrop of escalating global concern over climate change, promoting corporate green governance has become a critical issue for both the business community and academia. This study empirically examines the impact of climate risk on corporate green governance using a sample of Chinese A-share listed companies from 2011 to 2023. The results indicate that climate risk significantly promotes corporate green governance. This positive effect operates through two key mechanisms: enhancing green innovation and improving the quality of environmental information disclosure. Furthermore, heterogeneity analyses reveal that the effect of climate risk on green governance is more pronounced among firms with higher levels of artificial intelligence application and stronger internal control quality. Overall, this study not only provides a theoretical explanation for the causal relationship between climate risk and corporate green governance but also offers practical insights for firms seeking to establish climate-adaptive governance systems and for policymakers aiming to design differentiated environmental regulations.

Keywords

Climate risk; Green governance; Green innovation; Environmental information disclosure

Cite This Paper

Mule Tai. The Impact of Climate Risks on Corporate Green Governance: Evidence from China. Academic Journal of Business & Management (2026), Vol. 8, Issue 3: 16-30. https://doi.org/10.25236/AJBM.2026.080303.

References

[1] Guan Y, Lu H, Jiang Y, Tian P, Qiu L, Pellikka P, Heiskanen J. Changes in Global Climate Heterogeneity under the 21st Century Global Warming[J]. Ecol. Indic., 2021, 130: 108075. https://doi.org/10.1016/j.ecolind.2021.108075

[2] Yeh J R, Lin C Y. The Paris Agreement and the Transformation of Global Climate Law: Taiwan’s Perspective[J]. NTU Law Rev., 2018, 13: 149. https://doi.org/10.3966/181263242018091302001

[3] Huang Z, Yu N. Do Companies Care about the Manifestations of Climate Risk? Evidence from Corporate Cash Holdings[J]. Asia-Pac. J. Account. Econ., 2025, 32(5): 987–1005. https://doi.org/10.1080/16081625.2025.2521316

[4] Li X, Luo L, Tang Q. Climate Risk and Opportunity Exposure and Firm Value: An International Investigation[J]. Bus. Strategy Environ., 2024, 33(6): 5540–5562. https://doi.org/10.1002/bse.3747

[5] Peng W, Xiong L. Managing Financing Costs and Fostering Green Transition: The Role of Green Financial Policy in China[J]. Econ. Anal. Policy, 2022, 76: 820–836. https://doi.org/10.1016/j.eap.2022.09.014

[6] Mohy-ud-Din K, Shahbaz M, Khamdamov S. Does Green Governance Reflect Corporate Sustainability Performance? New Insight from G5 Countries[J]. Corp. Soc. Responsib. Environ. Manag., 2025, 32(4): 4900–4922. https://doi.org/10.1002/csr.3203

[7] Zhang L, Chen J, Jiang C. Climate Risk and Banks’ Risk-Taking Behavior[J]. Finance Res. Lett., 2025: 108913. https://doi.org/10.1016/j.frl.2025.108913

[8] Gong X, Song Y, Fu C, Li H. Climate Risk and Stock Performance of Fossil Fuel Companies: An International Analysis[J]. J. Int. Financ. Mark. Inst. Money, 2023, 89: 101884. https://doi.org/10.1016/j.intfin.2023.101884

[9] Chen J, Guo X, Geng Y, Liu R. Climate Risk and Trade Credit Financing: Evidence from China[J]. Int. J. Financ. Econ., 2025, 30(3): 2514–2535. https://doi.org/10.1002/ijfe.3027

[10] Lin B, Wu N. Climate Risk Disclosure and Stock Price Crash Risk: The Case of China[J]. Int. Rev. Econ. Finance, 2023, 83: 21–34. https://doi.org/10.1016/j.iref.2022.08.007

[11] Lu X, Zeng Q, Huang Y, Wu H. Management Climate Risk Concern and Corporate Bond Credit Spread[J]. J. Int. Money Finance, 2025, 153: 103293. https://doi.org/10.1016/j.jimonfin.2025.103293

[12] Yin Z, Deng R, Xia J, Zhao L. Climate Risk and Corporate ESG Performance: Evidence from China[J]. N. Am. J. Econ. Finance, 2024, 74: 102245. https://doi.org/10.1016/j.najef.2024.102245

[13] Desheng L, Xin J, Mingzhu L, Wang M. Climate Risks for Investors’ Green Attentions from China?[J]. Econ. Polit., 2025, 37(3): 946–957. https://doi.org/10.1111/ecpo.12350

[14] Zhang L, Yang C, Luo K. The Impact of Climate Risk on Sustainability Performance of Enterprises: Evidence from China[J]. Finance Res. Lett., 2025: 107645. https://doi.org/10.1016/j.frl.2025.107645

[15] Wang H, Niu X, Xing H. Regional Climate Risk and Corporate Social Responsibility: Evidence from China[J]. Emerg. Mark. Finance Trade, 2025, 61(1): 21–43. https://doi.org/10.1080/1540496X.2024.2373097

[16] Mei K, Zhang Z. Environmental Regulation, Green Investment and Corporate Green Governance: Evidence from China’s New Environmental Protection Law[J]. Finance Res. Lett., 2025, 76: 106979. https://doi.org/10.1016/j.frl.2025.106979

[17] Sun H, Lu H, Hunt A. Climate Policy Uncertainty and Corporate Green Governance: Evidence from China[J]. Systems, 2025, 13(8): 635. https://doi.org/10.3390/systems13080635

[18] Liu J, Liang G. Green Finance, Green Governance Performance, and the ESG Performance: Evidence from a Quasi-Natural Experiment[J]. Finance Res. Lett., 2025, 84: 107785. https://doi.org/10.1016/j.frl.2025.107785

[19] Yi L, Li T, Zhang X, Huang Q, Ma Y, Wang P. CEO Power and Corporate Green Governance from the Perspective of Input-Output Efficiency[J]. Emerg. Mark. Finance Trade, 2023, 59(3): 836–847. https://doi.org/10.1080/1540496X.2022.2108318

[20] Feng B, Chen X, Tang H. AI-Driven Green Governance: Assessing the Impact of Artificial Intelligence on Corporate Sustainability Performance[J]. J. Innov. Knowl., 2026, 11: 100869. https://doi.org/10.1016/j.jik.2025.100869

[21] Ma X, Zhou A, Chi C. ESG Performance and Green Total Factor Productivity[J]. Finance Res. Lett., 2025, 73: 106630. https://doi.org/10.1016/j.frl.2024.106630

[22] Yang Y, Narita D. Is Issuing Green Bonds Helpful in Improving Corporate Green Governance? A Study Based on Chinese Listed Companies[J]. J. Clean. Prod., 2025, 525: 146628. https://doi.org/10.1016/j.jclepro.2025.146628

[23] Lyu F, Zhang Z, Fu G, Liu Z, Treepongkaruna S. Multiple Shareholding Institutional Investors and Green Governance of Heavy-Polluting Industries[J]. Bus. Strategy Environ., 2024, 33(4): 3569–3587. https://doi.org/10.1002/bse.3667

[24] Chen Y, Xu Z. Impact of Digital Economy Development on Corporate Green Governance Efficiency[J]. Technol. Anal. Strateg. Manag., 2025, 37(12): 3190–3205. https://doi.org/10.1080/09537325.2024.2399206

[25] Zhao X, Yao X, Huang J. Climate Risks and Financial Stability: Evidence from China[J]. Int. Rev. Financ. Anal., 2025: 104307. https://doi.org/10.1016/j.irfa.2025.104307

[26] Hamim M T, Mollah S. Corporate Climate Risk Governance and Environmental Innovation[J]. Bus. Strategy Environ., 2025, 34(6): 7112–7138. https://doi.org/10.1002/bse.4352

[27] Dilling P F, Harris P, Caykoylu S. The Impact of Corporate Characteristics on Climate Governance Disclosure[J]. Sustainability, 2024, 16(5): 1962. https://doi.org/10.3390/su16051962

[28] Wan D, Liu H, Yang D, Li G. How Does Climate Risk Impact Corporate Green Investment? Evidence from Chinese Listed Firms[J]. J. Environ. Manag., 2025, 396: 128040. https://doi.org/10.1016/j.jenvman.2025.128040

[29] Zhao Y, Zhou Y, Yang Q, Gong Y. Technology Empowerment, Digital Transformation, and Enhancing Corporate ESG Performance[J]. Int. Rev. Econ. Finance, 2025: 104239. https://doi.org/10.1016/j.iref.2025.104239

[30] Mushtaq R, Du A M, Bahoo S. Climate Governance, CSR Strategy, and Corporate Environmental Decoupling[J]. Finance Res. Lett., 2025: 107925. https://doi.org/10.1016/j.frl.2025.107925

[31] Duan K, Qin C, Ma S, Lei X, Hu Q, Ying J. Impact of ESG Disclosure on Corporate Sustainability[J]. Finance Res. Lett., 2025, 78: 107134. https://doi.org/10.1016/j.frl.2025.107134

[32] Wang J, Zhao L, Zhu R. Peer Effect on Green Innovation: Evidence from 782 Manufacturing Firms in China[J]. J. Clean. Prod., 2022, 380: 134923. https://doi.org/10.1016/j.jclepro.2022.134923

[33] Han L, Liu T, Lu H, Zhang W. Climate Risk Disclosure, Green Innovation and Enterprise Value[J]. Finance Res. Lett., 2025, 72: 106553. https://doi.org/10.1016/j.frl.2024.106553

[34] Zhong W, Jin L. The Impact of Climate Risk Disclosure on Corporate Green Technology Innovation[J]. Sustainability, 2025, 17(6): 2699. https://doi.org/10.3390/su17062699

[35] Qin X, Muskat B, Ambrosini V, Mair J, Chih Y Y. Green Innovation Implementation: A Systematic Review and Research Directions[J]. J. Manag., 2025: 01492063241312656. https://doi.org/10.1177/01492063241312656

[36] Zhang N, Wang Y. How to Shape Corporate Green Behavior? The Green Governance Effect of Executive Incentive Strategies[J]. Int. Rev. Econ. Finance, 2025: 104612. https://doi.org/10.1016/j.iref.2025.104612

[37] Bolognesi E, Burchi A, Goodell J W, Paltrinieri A. Stakeholders and Regulatory Pressure on ESG Disclosure[J]. Int. Rev. Financ. Anal., 2025, 103: 104145. https://doi.org/10.1016/j.irfa.2025.104145

[38] Onyeaka H, Tamasiga P, Bakwena M. Carbon Transparency in Global Supply Chains: The Mediating Role of Institutional and Innovative Capacity[J]. Energy Strategy Rev., 2024, 53: 101405. https://doi.org/10.1016/j.esr.2024.101405

[39] Barker R. Corporate Sustainability Reporting[J]. J. Account. Public Policy, 2025, 49: 107280. https://doi.org/10.1016/j.jaccpubpol.2024.107280

[40] Liu L, Feng A, Liu M. The Effect of Green Innovation on Corporate Financial Performance: Does Quality Matter?[J]. Finance Res. Lett., 2024, 62: 105255. https://doi.org/10.1016/j.frl.2024.105255

[41] Lv Y, Wang F, Liu G, Ren R. The Impact of Environmental Court Construction on the Quality of Corporate Environmental Information Disclosure[J]. Int. Rev. Financ. Anal., 2024, 95: 103512. https://doi.org/10.1016/j.irfa.2024.103512