Global reach, local impact: How China's outward foreign direct investment shapes corporate carbon risk management?
研究中国对外直接投资如何降低企业碳风险，发现其效果因企业性质、ESG评级和融资约束而异，并通过企业声誉、下行风险、债务融资成本和绿色创新等渠道发挥作用，且与碳排放交易体系协同增效。
Outward Foreign Direct Investment (OFDI) has emerged as a pivotal driver of globalization, enabling firms to broaden their reach across borders and tap into diverse resources. We present evidence supporting the role of OFDI in mitigating corporate carbon risk. However, the extent of the underlying mitigation effect varies depending on factors such as corporate nature, ESG ratings, and financial constraints. We also identify several intermediaries through which OFDI exerts its mitigating influence, such as corporate reputation, downside risk exposure, debt financing costs, and the firm's ability to innovate in green technologies. Further exploration substantiates the synergistic effects between OFDI and the emissions trading scheme, which together help further reduce corporate carbon risk. These findings offer valuable insights into how enhancing OFDI can mitigate carbon risk, thus supporting China's transition toward a low-carbon economy. • OFDI mitigates corporate carbon risks at the firm level. • OFDI's role in mitigating carbon risk varies by firm characteristics. • The ETS amplifies the carbon risk reduction effect of OFDI. • Corporate reputation, downside risk, debt financing cost, and green innovation efficiency are essential channels.