Green public procurement and corporate environmental performance: An empirical analysis based on data from green procurement contracts

Suyi Zheng and Jiandong Wen

International Review of Economics & Finance, 2024, vol. 96, issue PA

Abstract: Green public procurement (GPP) is regarded as a vital tool for achieving energy conservation and emission reduction. This policy aims to guide enterprises towards cleaner production by creating market demand for green products on the demand side. However, it remains unclear whether GPP can genuinely improve corporate environmental performance. This study reviews relevant policy documents and constructs a wordlist of “green procurement contract" using the Word2vec model. By employing text analysis, we identify public procurement contracts that meet green standards. Subsequently, we match these contracts with data from China's A-share-listed companies to empirically test the impact of GPP contracts on corporate environmental performance. The findings reveal that GPP significantly enhances corporate environmental performance, primarily through conceptual governance effects, source governance effects, terminal governance effects, and supervision governance effects. Heterogeneity analysis indicates that this environmental incentive effect is particularly significant among non-state-owned enterprises and small and medium-sized enterprises. Additionally, the effect is more pronounced in regions with high government environmental awareness and moderate environmental enforcement intensity. Further analysis shows that GPP also improves corporate social responsibility performance and promotes corporate ESG performance, thereby fostering sustainable development. Moreover, the study points out that increasing the transparency of information disclosure, enhancing procurement efficiency, and maintaining the stability of procurement relationships all contribute to strengthening the environmental performance incentive effect of GPP. This article helps to deepen the understanding of the “proactive government” promoting the development of green economy and also provides theoretical reference for the breakthrough of corporate green transformation under the target of “dual carbon.”

Keywords: Green public procurement; Corporate environmental performance; Demand-side policy; Environmental incentive effect (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:96:y:2024:i:pa:s1059056024005707

DOI: 10.1016/j.iref.2024.103578

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