Abstract
The transition toward low-carbon sustainable development is critical for transforming heavily polluting industries. Green credit policies are designed to direct capital toward environmentally friendly and low-carbon corporates. Using the introduction of China's Green Credit Guidelines in 2012 as a quasi-natural experiment, this study analyzes a panel of A-share listed companies from 2008 to 2021. Employing a Difference-in-Differences approach, we assess the impact of the green credit policy (GCP) on corporate carbon emissions. Empirical results indicate that GCP leads to a significant reduction in corporate carbon emissions. Baseline DID estimates show that treated corporates reduced emissions by approximately 13-19% compared to the control group, a finding that remains robust across a series of checks. The emission-reduction effect of GCP is more pronounced in corporations with a separated board leadership structure, higher profitability, central urban locations, and well-developed digital infrastructure. We identify two primary mechanisms through which GCP operates: imposing financial constraints that deter investment in carbon-intensive activities, and promoting green innovation, which facilitates the adoption of environmentally friendly technologies and practices. Further analysis reveals that both internal governance and external regulatory factors-such as stronger environmental awareness among executives, ISO 14,001 certification, enhanced intellectual property protection, and strict enforcement of the Three Simultaneous System-strengthen the effectiveness of GCP in reducing emissions. Through these channels, GCP supports the transition to a more sustainable economic pathway and contributes to global climate change mitigation.