Climate risk and firm environmental accountability: Evidence for energy transition policy

R. Benkraiem (), W. Tan and L. Wu
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R. Benkraiem: Audencia Business School

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Abstract: Environmental accountability must be reinforced to ensure a credible energy transition amid geopolitical fragmentation and rising climate risks. Therefore, this study examines whether climate shocks function as a disciplining mechanism against firm greenwashing, which is a major barrier to effective policies. We investigate how extreme rainfall affects firm greenwashing based on data from China's A-share listed firms between 2011 and 2020. A two-way fixed-effects model complemented by an instrumental variable based on terrain ruggedness reveals a causal relationship: extreme rainfall significantly reduces greenwashing by intensifying institutional and stakeholder scrutiny. We find that goodwill plays a significant mediating role in this relationship, and the effect is reinforced when public environmental concern and firm profitability are high. The findings hold particularly for non-state-owned and high-polluting enterprises. These findings offer crucial insights for developing resilient national energy policies that ensure firm integrity through climate risk governance. This approach is essential for realizing a just transition in an increasingly fragmented world.

Keywords: Greenwashing; Extreme rainfall; Firm accountability; Geopolitical fragmentation; Climate risk; Energy transition (search for similar items in EconPapers)
Date: 2026-08
Note: View the original document on HAL open archive server: https://hal.science/hal-05640504v1
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Published in Energy Policy, 2026, 215, pp.115292. ⟨10.1016/j.enpol.2026.115292⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05640504

DOI: 10.1016/j.enpol.2026.115292

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