Abstract

Addressing the productivity challenge of climate technology (ClimTECH) firms and avoiding the “green trap” is crucial for decoupling economic growth from carbon emissions and achieving sustainable development. This study uses the establishment of green finance reform and innovation pilot zones as a quasi-natural experiment and employs a difference-in-differences model to explore the impact of green finance policies on the total factor productivity (TFP) of ClimTECH firms and its spillover effects. The results show that (1) Green finance policies significantly increase TFP, especially in state-owned firms, firms that actively disclose environmental information, firms led by long-tenure CEOs, and those in regions with strong intellectual property protection. (2) The channel analysis shows that green finance policies enhance firms' TFP by easing financing constraints, encouraging green technology improvements, and improving capital allocation efficiency. (3) The spillover effect analysis shows that the TFP increase driven by green finance policies not only enhances firm value but also stimulates local green innovation and reduces regional carbon emissions. This research offers theoretical insights and policy implications for strengthening green finance frameworks and enhancing the environmental responsibility of ClimTECH firms.