Purpose This paper aims to examine how climate risk affects corporate sustainable innovation in Chinese A-share listed companies (2008–2023), analyzing its impact on corporate sustainable innovation inputs/outputs and identifying mitigation mechanisms through financing, operations and governance. Design/methodology/approach Using panel data from Chinese A-share listed companies (2008–2023), this paper use basic regression test to assess climate risk’s impact on corporate sustainable innovation, with robustness test and mediating/moderating effect test examining financing constraints, business income, innovation activity and corporate governance. Findings Climate risk significantly inhibits corporate sustainable innovation, reducing both R&D inputs and patent outputs. Financing constraints and declining business income mediate this effect, while active innovation and strong governance mitigate it. Effects vary by firm attributes (ownership, growth stage), industry traits (competitiveness, technology level) and regional factors (location, institutional quality). State-owned and subsidy-backed firms show greater resilience, as do high-tech industries and coastal-region firms. Results highlight climate risk as a systemic threat but identify actionable buffers through innovation capacity and governance improvements, with implications for targeted policy interventions across different firm types and regions. Practical implications Firms should strengthen governance and innovation to mitigate climate risks. Policymakers need targeted support for vulnerable firms/regions. Investors should assess climate resilience through innovation capacity and governance quality when making decisions. Social implications Climate risk may widen inequality by disproportionately affecting smaller firms and poorer regions. Proactive policies can promote inclusive growth while maintaining innovation capacity amid climate challenges. Originality/value This paper pioneers microlevel analysis of climate risk’s impact on innovation, identifying novel mitigation mechanisms and providing granular insights across firm, industry and regional levels.
Shang et al. (2026) studied this question.