Climate-related disclosures under the TCFD framework and business green innovation: Evidence from China A-share companies

• Published in: Finance research letters 2024-05, Vol.63, p.105310, Article 105310
• Main Authors: Gao, Yongjun, Mohd Saleh, Norman, Abdullah, Ahmad Monir, Adznan, Syaima
• Format: Article
• Language: English
• Subjects: Climate-related disclosures; Green innovation; Machine learning; TCFD
• ISSN: 1544-6123; 1544-6131
• DOI: 10.1016/j.frl.2024.105310

•Demonstrates the significant positive impact of climate-related disclosures on green innovation in Chinese A-share companies.•Fills a gap in the literature by providing empirical evidence from the Chinese market, underpinning the TCFD framework's applicability.•Offers insights for policymakers and practitioners on fostering green innovation through improved climate-related disclosures.•This study is the first to construct a set of climate-related disclosure keywords consistent with the TCFD framework for a Chinese sample, highlighting a novel approach in climate finance research. This study examines the influence of climate-related disclosures on business green innovation among a sample of Chinese A-share listed companies from 2009 to 2021. Based on the framework for Task Force on Climate-related Financial Disclosures, measurements of climate-related disclosures and indicators of four dimensions were made using machine learning and entropy methodologies. Findings show that climate-related disclosures positively influence business green innovation. However, the dimension of governance is negatively related to corporate green innovation. The association between climate-related disclosures and business green innovation is partially mediated by debt financing costs.