In recent years, the escalating challenges posed by climate risks have drawn increasing investor attention to corporate performance in this area. To address these climate challenges and respond to investor concerns, companies are increasingly inclined to pursue digital innovation as a means to accelerate transformation. This study aims to investigate the impact of climate transition risks on corporate digital innovation.
The authors select data from China’s A-share listed companies from 2006 to 2022 to examine the impact of corporate climate transition risks on digital innovation.
The results reveal that corporate climate transition risks promote digital innovation. Furthermore, the authors find that climate transition risks have varying impacts on different types of digital innovation; specifically, they significantly promote digital innovation in blockchain, cloud computing and digital technology applications, but show no such effect in artificial intelligence and big data. Meanwhile, a more positive portrayal of climate transition risks during earnings communication conference correlates with greater digital innovation. Companies also integrate resources by stimulating external investor sentiment and increasing the proportion of research and development personnel, which enhances the influence of climate transition risks on digital innovation. Lastly, this relationship is more pronounced in high-tech and non-heavy pollution industries.
This study suggests that corporate management should prioritize sustainable development, avoiding the temptation to overlook the long-term impact of digital innovation in favor of short-term profits. Furthermore, investors must maintain their supervisory role, urging companies to persist in their efforts to address climate transition risks rather than abandoning these initiatives midway. Lastly, regulatory authorities need to implement guiding policies that assist companies in navigating climate transition risks.
This study highlights the value of climate transition risks in driving digital innovation, providing a theoretical basis for companies to address climate transition risks and accelerate digital transformation.
Unlike previous literature discussing the motivations behind climate transition risks, this study confirms that climate transition risks drive digital innovation. Additionally, through an analysis of earnings communication conference tones, the authors identify that varying tones convey different signals to investors. Finally, in contrast to previous studies that measure corporate innovation, the authors use text analysis on patents abstract texts to more accurately assess the level of digital innovation within firms.
