Heterogeneous Corporate Responses to Climate Change: Empirical Evidence from China

The largest greenhouse gas emitter with a fast-growing economy, China plays a vital role in low-carbon transition. Beijing has imposed regulations that require its industry achieving carbon emission reduction targets. Facing tougher environmental regulations, how did Chinese manufacturers respond to climate change? This communication seeks to offer empirical analyses of corporate responses through exploring the institutional capacity for mitigation with organizational and regional perspectives.

The conceptual framework integrates management and sociological theories, more particularly the Porter hypothesis and the ecological modernization theory. We apply the combined framework to analyze organizational shifts at the firm-level and at the meso-level by identifying efforts to curb climate change on the ground. A two-year survey (2013-2014) was conducted in over 100 firms in 15 industry sectors, including all key industries in the Pearl River Delta region, known as the “world factory”. In addition, our study used supplementary primary and secondary sources such as participant observation, interview and environmental audit report. By mixing quantitative and qualitative data, we gained corroboration and a more comprehensive understanding of climate-induced institutional changes.

Chinese businesses responded heterogeneously to climate change under similar socio-political-economic context. Their capacities for mitigation vary depending on organizational characteristics such as size, sector and served market. The majority of the surveyed firms took various eco-efficiency measures. Larger energy-intensive companies and export-oriented firms tend to make more efforts to reduce their carbon emissions. Some of the participating companies introduced climate-friendly technologies through voluntary agreements. But very few of them undertook low-carbon innovation. Our findings supported to some extent the theoretical claims. Stringent environmental regulations may induce innovation to improve both economic and environmental performance. However, the win-win situation is most likely to occur in firms with strong environmental commitments, advanced innovative capacities and substantial financial resources.