Firm-level carbon risk awareness and Green transformation: A research on the motivation and consequences from government regulation and regional development perspective

Carbon emissions have become a critical social, economic, and environmental sustainability issue in China. Firms also face many challenges in the process of carbon emission issues and green transformation, and it is essential to study carbon risk and green transformation at the enterprise level in depth. So, we used textual analysis to measure firm-level carbon risk awareness and green transformation level by using firms' data from 2011 to 2021 and then tested the positive relationship between carbon risk awareness and green transformation based on OLS regression and fixed-effects regression. In addition, we use quantile regression to demonstrate that increasing carbon risk awareness would lead to increasing green transformation. Besides, enhancing carbon risk awareness in the heavy-polluting industries promotes green transformation to a more obvious extent. After passing some robustness and endogeneity tests, the findings are still significant, and the promotion effect is more significant in SOEs and western regions. We further analyze the moderating effect of government regulation and regional characteristics. The consequences research finds that increased awareness of carbon risk and a green transformation leads to reduced financing constraints and increased growth for firms. The research has important guiding significance for firms to formulate low-carbon strategies and promote green transformation and provides a scientific reference for the government to formulate policies and promote sustainable development.