Beyond regulation: ecological civilisation construction and the quality of corporate green innovation in China

With the continuous deterioration of resources and the environment, high-quality green innovation has become crucial for balancing economic growth and environmental protection. However, governance relying on traditional environmental regulations is insufficient to stimulate green innovation sustainably. To break through the limitation, China has incorporated ‘ecological civilisation construction’ into its national top-level institutional design, aiming to promote coordinated economic and ecological development from an institutional perspective. Hence, we aim to explore the relationship between ecological civilisation construction and corporates’ green innovation quality. Using the first systematic pilot project of China’s ecological civilisation construction – the Ecological Civilisation Pilot Demonstration Zones policy – as a quasi-natural experiment, we construct a multi-period difference-in-difference model. We systematically examine the impact of the policy on the corporates’ green innovation quality using comprehensive data from Chinese A-share listed companies from 2008 to 2023. We find that the policy significantly improved the quality of green innovation for enterprises within the demonstration zones, mainly through two mechanisms: internal adjustments and external support. Heterogeneity analysis reveals that the positive effects of the policy are mainly concentrated in enterprises with weaker financing constraints, large enterprises, and high-tech enterprises. These findings provide a referenceable Chinese experience for global ecological governance and green transformation.