Does environmental law enforcement supervision improve corporate carbon reduction performance? Evidence from environmental protection interview

• Published in: Energy economics 2024-04, Vol.132, p.107441, Article 107441
• Main Authors: Pan, Junyu, Du, Lizhao, Wu, Haitao, Liu, Xiaoqian
• Format: Article
• Language: English
• Subjects: Carbon neutral; Carbon reduction performance; Environmental law enforcement supervision; Environmental protection interview
• ISSN: 0140-9883; 1873-6181
• DOI: 10.1016/j.eneco.2024.107441

In response to the challenge of carbon emissions, countries worldwide have implemented a diverse range of environmental policies. However, the inefficient implementation of these policies remains a remarkable hurdle in the process of carbon governance. Exploiting the environmental protection interview (EPI) initiated in 2014 and 2015 as a quasi-natural experiment and utilizing firm-level data from 2011 to 2018, this study investigates whether the enhanced supervision of local environmental law enforcement by the central government causes changes in corporate carbon reduction performance (CCRP) based on the Staggered DID model. We observe that EPI notably improves CCRP, and this enhancement manifests both immediately and persistently over time. Furthermore, the impact of EPI on CCRP is more pronounced among large-scale enterprises, enterprises with low financing constraints, and those with weak political affiliations. Mechanism analysis indicates that government pollution control efforts, public environmental awareness, and enterprise source control are pivotal factors that strengthen the effectiveness of EPI. This study reveals the positive effects of EPI in achieving carbon reduction goals and underscores the vital role of institutionalized law enforcement supervision mechanisms as a fundamental prerequisite for policy efficacy. •EPI intervention effects on CCRP are explored.•Staggered Differences-in-Differences method is applied to Chinas firm-level data.•EPI notably improves CCRP, and this enhancement manifests both immediately and persistently over time.•The impact of EPI on CCRP is heterogeneous at the firm level.•Government pollution control efforts, public environmental awareness, and enterprise source control are mechanisms.