Building Long-Term Sustainability: The Impact of Green Factory Certification Policy on Enterprise Capacity Utilization

This study examines whether green factory certification improves corporate capacity utilization. As a voluntary regulatory instrument for promoting green manufacturing, green factory certification may enhance firms’ production efficiency by providing legitimacy incentives and external recognition. Using Chinese A-share listed firms from 2010 to 2024, we employ a staggered difference-in-differences model and find that green factory certification significantly increases firms’ capacity utilization. Heterogeneity analyses show that this effect is stronger for firms in regions with stricter command-and-control environmental regulation, weaker market-based environmental regulation, greater financing constraints, and weaker product advantages. Mechanism tests indicate that political legitimacy and market legitimacy are two important channels through which certification improves capacity utilization. Further analyses show that certification-induced improvements in capacity utilization increase firm value and stock liquidity. This study provides empirical evidence on the real effects of green factory certification and highlights the role of voluntary environmental governance in promoting both sustainable transformation and industrial efficiency.