Climate Finance: Employment Opportunity or Alternative Crisis: Evidence From Chinese Listed Companies

Yuran Sun, Xiaohui Chen and Zhenmin Wang

Australian Economic Papers, 2025, vol. 64, issue 4, 402-416

Abstract: Based on a theoretical analysis, this study examines the impact of climate finance on employment and its mechanism based on calculated climate finance indices of Chinese cities and provinces from 2008 to 2023, combined with samples of A‐share listed enterprises in the Shanghai and Shenzhen stock markets. The results show that climate finance plays a positive role in promoting the employment level of enterprises. With the improvement in the climate finance level in the city where enterprises are located, the employment level of enterprises increases. Second, climate finance reduces the capital‐labor ratio of enterprises by encouraging them to carry out R&D activities, digital transformation, and risk hedging. This reduces the capital‐labor ratio and improves the employment level of enterprises. Third, climate finance can reduce the agency cost between shareholders and managers by reducing the difficulty of supervision by shareholders, alleviates information asymmetry, and curbs managerial opportunistic behavior. This lowers agency costs between shareholders and managers, thereby improving the employment level of enterprises.

Date: 2025
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