In several industrialised countries, governments are backing away from controversial building energy legislation that sought to ban oil and gas heating and replace them with fossil-free systems. An article co-authored by the Potsdam Institute for Climate Impact Research (PIK) in Nature Climate Change now offers guidance on achieving the switch to climate-friendly technology without political uproar. Based on recent economic findings, the article provides criteria and a political roadmap for moderate, targeted regulation to complement the gradual increase in carbon pricing.

Subsidies to key economic sectors such as agriculture, fossil fuels, fishing, and mining perpetuate environmental degradation, with negative impacts on biodiversity, the climate, and public health, according to a new research from the Institute of Environmental Science and Technology at the Universitat Autònoma de Barcelona (ICTA-UAB).

Abstract

Purpose

The main purpose of this study is to investigate the impact of state capital participation (SCP) on the corporate environmental engagement (CEE) of privately controlled listed firms in China.

Design/methodology/approach

We use a sample of 20,133 firm-year observations from 2009 to 2021. We use three different measures to proxy corporate environmental engagement and two different measures to proxy for state capital participation. We employ a difference-in-difference regression model to estimate the effect of state capital participation on corporate environmental engagement.

Findings

Using a sample of 20,133 firm-year observations from 2009 to 2021, we find that SCP significantly increases corporate expenditure on environmental protection, corporate environmental performance and ESG ratings. Specifically, SCP increases environmental investment capacity and attracts more media coverage, online attention and analysts’ following, which leads to better environmental engagement. Further analyses show that after state shareholders exit privately controlled firms, CEE deteriorates, while private capital injection in state-owned firms has no significant impact on CEE. The positive effect of SCP is stronger in privately controlled firms with local government ownership, a larger number of state shareholders, longer state shareholder holding periods, those without politically connected managers and firms operating in heavy pollution industries. Lastly, we show that minority government ownership reduces firm-level toxic emissions and enhances financial performance.

Research limitations/implications

We enrich the literature on the role of minority state ownership in corporate financial and environmental performance.

Originality/value

We enrich the literature on the role of minority state ownership in corporate financial and environmental performance. In light of the escalating environmental concerns and the growing emphasis on corporate environmental responsibility, this study highlights the beneficial role of minority government ownership in driving environmental performance. By providing resources and attracting external scrutiny, the government, as a minority shareholder, can significantly enhance the environmental engagement of privately controlled firms.