From City Wisdom to Corporate Action

As climate change intensifies globally, a significant gap has emerged between urban climate governance initiatives and corporate environmental action, presenting a critical challenge for sustainable development. While existing research has examined macrolevel climate policy effects, the microlevel transmission mechanisms through which urban climate governance translates into firm-level environmental responsibility remain insufficiently understood. This study addresses this knowledge gap by conducting a quasi-natural experiment analysis of China’s climate-adaptive city construction policy, employing a difference-in-difference approach with empirical data from 28 520 A-share listed company observations spanning 2013–23. Our analysis reveals that climate governance initiatives substantially enhance corporate environmental responsibility, with treatment effects strengthening over time as firms develop adaptive capabilities. We identify three interconnected mechanisms driving this transformation: first, institutional investor shareholding and board diversity function as organizational catalysts that amplify policy effectiveness; second, green innovation serves as a key transmission pathway through which policy signals convert into tangible environmental actions; and third, policy impacts exhibit notable heterogeneity across regional climate vulnerabilities and firm characteristics. The effects are particularly pronounced in regions experiencing severe meteorological disasters and high greenhouse gas emissions, as well as in firms with advanced digital transformation capabilities or those operating in pollution-intensive industries. These findings provide crucial insights for designing more effective climate governance systems by revealing how urban-level policies can incentivize corporate environmental action through targeted organizational and contextual factors, thereby contributing to global climate mitigation efforts

Climate change · Climate governance · Corporate governance · Corporate social responsibility · Environmental governance · Extreme weather · Greenhouse gas · Sustainable development · Corporate Social Responsibility Reporting · Energy, Environment, Economic Growth · Sustainable Finance and Green Bonds