How does biodiversity regulation affect corporate technological progress?

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Speaker: Anna Du (Edinburgh Napier University) and Suwan Long (IESEG School of Management)

Biodiversity loss has emerged as an important environmental risk with growing implications for corporate strategy and technological development. This paper examines whether biodiversity regulation improves firm-level technological progress. We exploit China’s Green Shield Action, a nationwide campaign launched in 2017 to strengthen ecological protection in national nature reserves, as a quasi-natural experiment. Using a difference-in-differences model with panel data on Chinese A-share listed firms from 2010 to 2023, we find that biodiversity regulation increases firms’ total factor productivity, with effects emerging after a policy lag. Mechanism analysis shows that green innovation is an important channel linking biodiversity regulation to technological progress. However, the innovation response differs across firms: while the overall effect operates mainly through substantive green innovation, firms already engaged in patenting exhibit stronger strategic green innovation responses. These findings provide new evidence on how biodiversity regulation shapes corporate innovation and productivity.

The weekly climaTRACES workshops, organised by Kamiar Mohaddes and Henning Zschietzschmann, are attended by a diverse group of people from economics, geography, politics, engineering, business, earth sciences, natural sciences, and history, generating interdisciplinary discussion. One person leads the session, on either a paper they have written, a work in progress, or just an idea they have and would like feedback on. This is also an opportunity for people to find our more about the team on what climaTRACES have been up to and what future events and research projects are being developed.

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No registration required. If you have any questions about this seminar, please email Henning Zschietzshmann.

Please note, this workshop is an in-person event but in case you are not able to attend, you can also join the workshop virtually on Zoom.