Can Sustainable Finance Policy Reduce Regional Green Innovation Disparities? A Strategic Innovation Perspective

Regions dominated by brown industries have long been excluded from conventional green financial systems, reinforcing spatial inequality in green innovation. Under financing constraints, brown firms tend to adopt strategic innovation behaviors—namely, symbolic, intermittent, or displaced innovation. These behaviors create technological lock-in and exacerbate regional disparities. Sustainable finance offers a potential pathway by targeting support to transformable brown firms. Using China’s north–south green innovation divide as a case, we find that sustainable finance policy significantly narrows regional green innovation disparities. Mechanism analysis reveals that the policy differentially suppresses three strategic innovation archetypes. It attenuates symbolic and intermittent innovation through funding conditionality and inter-temporal incentives yet fails to curb displaced innovation where funds are diverted toward non-green projects. Furthermore, patient capital and ESG ratings can synergistically enhance the efficiency of sustainable finance policy. These conclusions offer valuable insights for the advancement of regional rebalancing in green innovation.