Social Awareness, Corporate Environmental Investment and Export: Evidence From China

In this paper, we investigate the impact of public environmental awareness on the environmental investment and export behaviours of publicly listed companies. To quantify public environmental awareness at the prefecture-year level, we develop a robust metric using the Baidu Index for specific environmental-related keywords. Our findings indicate that heightened public environmental awareness encourages listed companies to increase their environmental investments. Conversely, this heightened awareness may constrain firms' export activities, particularly in industries with high pollution levels, as companies face increased pressure to reduce pollution. Additionally, firms tend to favour exporting to countries with high environmental standards, suggesting a preference for cleaner markets. We identify two primary mechanisms through which social awareness influences environmental regulation: firstly, it prompts local governments to enact more stringent environmental legislation. Secondly, it motivates the public to actively engage in environmental issues by filing increased complaints, thereby compelling the government to enforce stricter environmental regulations. Beyond affecting firms' environmental investments, heightened social awareness also encourages local firms to implement industrial pollution control measures and enhance their corporate governance practices related to environmental protection.