Inhibiting or promoting? The impact of carbon emissions trading on corporate environmental responsibility

Carbon emissions trading (CET) policy presents a crucial market-oriented environmental strategy to shape corporate environmentally responsible behaviour. However, how market-oriented environmental strategy may affect corporate environmental responsibility remains to be further investigated. Based on the practice of China's CET, this paper investigates the impact of market-oriented environmental strategy on the environmental responsibility level of high‑carbon enterprises in China. The relevant results are threefold. 1) Contrary to conventional wisdom and CET policy expectation, China's CET policy discourages high‑carbon enterprises from fulfilling environmental responsibility, leading to an overall decrease of 32.6 % in the environmental responsibility level. 2) China's CET policy strengthens the financing constraints of high‑carbon enterprises, which makes them face a financial dilemma wherein it is challenging to balance environmental management and production operations in the absence of financial support. 3) Compared with non-state-owned enterprises and small- and micro-sized enterprises, the inhibitory effect of China's CET policy on the environmental responsibility level of state-owned enterprises (SOEs) and medium- and large-sized enterprises (MLEs) is stronger, whereas the inhibitory effect of financing constraints induced by China's CET policy on the environmental responsibility level of SOEs and MLEs is weaker.