Sustainability Solution: Renewable Energy Innovation Against Climate Disasters

Hiva Rastegar, Aymen Sajjad, Gabriel Eweje and Kazunori Kobayashi

Business Strategy and the Environment, 2025, vol. 34, issue 8, 9808-9824

Abstract: In an era where climate change poses profound threats to human life and activities, the need for innovative renewable energy solutions has never been more critical. Accordingly, this study examines the moderating effects of natural disaster uncertainty and climate policy uncertainty on firms' pursuit of renewable energy innovation following climate change–induced disasters. Through an in‐depth analysis grounded in the behavioral theory of the firm and integrated with the threat rigidity model, this study explores how these uncertainties influence firms' behavior following climatic threats. Using a difference‐in‐difference‐in‐differences approach in confluence with meta‐analysis, the study scrutinizes the pursuit of renewable energy innovation among US firms from 2013 to 2018. The findings indicate that natural disaster uncertainty significantly dampens firms' pursuit of renewable energy innovation postclimatological disasters. Theoretically, our study enhances the understanding of how climate risks affect innovation behavior, highlighting the critical role of natural disaster uncertainty. It bridges a crucial gap in the academic discourse on climate risk and renewable energy innovation, offering practical insights for managers and policy‐makers. For managers, the findings highlight the need for robust risk management to sustain innovation. Further, for policy‐makers, this research provides rich insights into developing supportive regulatory frameworks and investment incentives to mitigate climate risks and advance sustainable energy solutions amidst climate challenges.

Date: 2025
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