How does carbon awareness impact corporate sustainable development? Evidence from China

Amid growing global concerns about greenhouse gas emissions, carbon awareness has emerged as a critical indicator of corporate commitment to low-carbon strategies. Drawing on data from 3690 A-share listed companies across 372 cities in China between 2001 and 2020, this study explores the positive relationship between corporate carbon awareness and sustainable development capability (SUSDEV) within the framework of the Porter Hypothesis. The findings reveal that a 1 % increase in carbon awareness leads to a significant 0.551-point rise in the SUSDEV evaluation score, accounting for approximately 4 % of the average SUSDEV score (13.394) among the sampled firms. Key drivers of this effect include increased government subsidies, environmental investments, enhanced Tobin's Q, and improved innovation capability. Analysis using the PSM-DID model further substantiates these findings, demonstrating that the implementation of the "Low-Carbon City" pilot policy significantly bolsters the contribution of carbon awareness to long-term sustainable development. Additionally, the study provides a heterogeneous analysis of the impact of carbon awareness across firms with varying characteristics. These findings expand the theoretical boundaries of the Porter Hypothesis, offering valuable insights for businesses seeking to achieve long-term operational sustainability while actively fulfilling environmental responsibilities.