Environmental protection strategic alliance and enterprise green innovation – Nature

Executive Summary

This report analyses the role of environmental protection strategic alliances in advancing corporate green innovation, a critical component for achieving the Sustainable Development Goals (SDGs). Based on data from Chinese A-share listed firms from 2007–2022, the study finds that these alliances significantly enhance firms’ green innovation performance, directly contributing to SDG 9 (Industry, Innovation, and Infrastructure) and SDG 13 (Climate Action). The primary mechanisms driving this improvement are identified as increased investment in environmental initiatives and facilitated transfer of environmental knowledge, aligning with SDG 17 (Partnerships for the Goals). The positive impact is amplified under specific conditions, including strong local environmental governance, equity-based alliance structures, the presence of green institutional investors, and a robust cooperative culture among partners. These findings offer strategic guidance for enterprises on their path to sustainable development and provide policy insights for achieving national carbon neutrality targets in line with global sustainability agendas.

Introduction: Aligning Corporate Strategy with Sustainable Development Goals

Advancing green innovation is fundamental for businesses to achieve long-term sustainability and contribute to the global 2030 Agenda. It enables firms to meet ecological obligations under frameworks like SDG 12 (Responsible Consumption and Production) and SDG 13 (Climate Action), while also securing financial benefits through enhanced efficiency and access to green markets. However, enterprises often face significant barriers, including high costs and a lack of specialised knowledge, which hinders their progress toward these goals. This creates a dilemma where the willingness to act is not matched by the capacity to do so. Strategic alliances, a key modality of SDG 17 (Partnerships for the Goals), offer a solution by enabling firms to overcome resource and capability limitations. While research has explored various strategic partnerships, a significant gap exists in understanding alliances specifically focused on environmental protection. This report addresses this gap by examining how environmental strategic alliances serve as a proactive mechanism for promoting green innovation, thereby helping firms contribute more effectively to the SDGs.

The Role of Strategic Alliances in Advancing the SDGs

Theoretical Framework for Sustainable Partnerships

Strategic environmental alliances are instrumental in fostering green innovation by addressing two primary challenges: resource scarcity and knowledge gaps. These partnerships directly support the implementation of several SDGs.

• Resource Integration for SDG 9 and SDG 13: From a resource-based perspective, alliances allow firms to pool capital and share the costs of green technologies and projects. This collaborative investment reduces financial risk and uncertainty, enabling firms to undertake ambitious projects that support sustainable industrialization (SDG 9) and climate action (SDG 13).
• Knowledge Spillovers for SDG 12 and SDG 17: From a knowledge and network perspective, these alliances create platforms for sharing eco-friendly technologies and sustainable management practices. This transfer of environmental expertise, or “knowledge spillover,” accelerates learning and helps firms refine production methods and develop innovative green products, advancing responsible production (SDG 12) through effective partnerships (SDG 17).

Hypothesis: Alliances as Catalysts for Green Innovation

Based on this framework, it is hypothesised that environmental strategic alliances are a significant driver of corporate green innovation. By enhancing a firm’s capacity for environmental investment and facilitating knowledge spillovers, these collaborations empower enterprises to overcome key barriers and improve their sustainable innovation performance, thus accelerating progress towards multiple SDGs.

Methodology: Measuring the Impact on Green Innovation

Sample and Data

The analysis utilises data from A-share listed companies in China from 2007 to 2022. Corporate financial and governance data were sourced from the CSMAR database, while information on environmental protection strategic alliances was extracted from the CNRDS database. This comprehensive dataset allows for a robust empirical examination of the relationship between strategic alliances and green innovation outcomes.

Variables and Model

The core variables for this report are defined as follows:

1. Green Innovation (Ginv): Measured by the natural logarithm of the annual count of green invention patents granted to a firm. This metric reflects a firm’s capacity for high-quality, substantive innovation that contributes to environmental sustainability goals.
2. Environmental Protection Strategic Alliance (GAlliance): A binary variable indicating whether a firm was actively involved in an environmental protection strategic alliance in a given year.
3. Control Variables: A set of firm-specific characteristics related to size, financial condition, and corporate governance were included to ensure the precision of the model estimation.

A fixed-effects regression model was employed to analyse the connection between environmental strategic alliances and corporate green innovation, controlling for firm, year, and industry-specific unobserved factors.

Key Findings: The Efficacy of Alliances in Driving Sustainable Innovation

Core Impact on Green Innovation

The empirical analysis confirms that participation in environmental strategic alliances has a significant positive impact on corporate green innovation. The regression coefficient for the alliance variable (GAlliance) was 0.057 and statistically significant at the 1% level. This result provides strong evidence that forming partnerships for environmental protection is an effective strategy for firms to enhance their contribution to SDG 9 by fostering innovation and sustainable industrial practices.

Mechanisms for Achieving SDG-Related Outcomes

Further analysis explored the pathways through which these alliances drive green innovation, revealing two distinct channels that align with the principles of SDG 17 (Partnerships for the Goals).

• Enhanced Environmental Investment Channel: The positive effect of alliances on green innovation is significantly more pronounced in firms with a higher capacity for environmental protection investment. This suggests that alliances empower firms by providing the necessary resources and confidence to invest in sustainable technologies, directly supporting climate action (SDG 13) and green infrastructure (SDG 9).
• Environmental Knowledge Spillover Channel: The impact of alliances is stronger when partner firms demonstrate a high potential for knowledge spillover (measured by their green patent output). This confirms that alliances serve as conduits for sharing expertise, accelerating the adoption of sustainable practices and technologies in line with SDG 12 (Responsible Consumption and Production).

Factors Influencing the Success of Sustainable Partnerships

The effectiveness of environmental strategic alliances in promoting green innovation is not uniform but is influenced by several contextual factors. Understanding these factors is crucial for maximising the contribution of such partnerships to the SDGs.

1. Governmental Environmental Focus: The positive impact of alliances is stronger in regions where local governments demonstrate a high level of concern for environmental issues. This underscores the importance of a supportive policy environment for achieving SDG 13 and SDG 17.
2. Alliance Structure: Equity-based alliances, which involve deeper financial integration, have a significantly stronger positive impact on green innovation than non-equity (contractual) alliances. This highlights the role of commitment and shared risk in the success of partnerships for the goals (SDG 17).
3. Presence of Green Investors: The involvement of institutional investors with a green focus amplifies the positive effect of alliances. These investors provide not only capital but also strategic pressure and expertise, aligning corporate actions with broader sustainable finance principles and the SDGs.
4. Cooperative Culture: The beneficial effect of alliances is magnified when partner firms exhibit a strong cooperative culture. Trust and a shared commitment to collaboration are essential for effective knowledge sharing and joint innovation, reinforcing the spirit of SDG 17.

Conclusion and Policy Recommendations for Accelerating the 2030 Agenda

Summary of Findings

This report demonstrates that environmental protection strategic alliances are a powerful tool for enhancing corporate green innovation. By boosting environmental investment and facilitating knowledge transfer, these partnerships enable firms to make significant contributions to key Sustainable Development Goals, including SDG 9, SDG 12, SDG 13, and SDG 17. The success of these alliances is contingent on supportive government policies, appropriate alliance structures, the engagement of green investors, and a strong collaborative culture.

Policy Recommendations

To leverage these findings and accelerate progress towards the 2030 Agenda, the following actions are recommended:

• For Governments: Local authorities should intensify their focus on environmental protection to create a stable and supportive policy environment. This includes offering financial incentives like subsidies and green credit to encourage the formation and success of environmental alliances.
• For Industry Associations: Industry bodies should establish platforms to facilitate environmental alliances, promote standardised practices, and encourage information sharing. This will reduce transaction costs and enhance the potential for collaborative green innovation across sectors.
• For Enterprises: Firms should proactively seek to form environmental strategic alliances, prioritising partners in regions with strong environmental policies. Opting for equity-based alliance models and engaging with green institutional investors can enhance alliance effectiveness. Cultivating an internal culture of cooperation and knowledge sharing is essential for maximising the benefits of these partnerships and advancing corporate contributions to the Sustainable Development Goals.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article on environmental protection strategic alliances and green innovation connects to several Sustainable Development Goals (SDGs). The analysis identifies the following primary and related SDGs:

1. SDG 9: Industry, Innovation and Infrastructure
   • Explanation: This is the most central SDG addressed. The article’s core focus is on “green innovation activities” and how strategic alliances “significantly enhance firms’ green innovation performance.” It directly discusses the development of “environmentally friendly technologies,” “green technology R&D,” and upgrading “environmentally friendly production facilities,” which are key components of building resilient infrastructure and promoting sustainable industrialization.
2. SDG 17: Partnerships for the Goals
   • Explanation: The entire study is framed around “strategic alliances” as the mechanism to achieve green innovation. The article defines these alliances as a “critical mechanism for enterprises to facilitate green transformation” and an “effective form of interorganisational cooperation.” This directly reflects the spirit of SDG 17, which emphasizes multi-stakeholder partnerships to mobilize and share knowledge, technology, and financial resources for sustainable development.
3. SDG 12: Responsible Consumption and Production
   • Explanation: The article connects green innovation to outcomes that support sustainable production patterns. It states that green innovation helps firms in “enhancing energy efficiency, lowering material usage,” and developing “environmentally sustainable production methods.” These actions are fundamental to achieving the sustainable management and efficient use of natural resources as outlined in SDG 12.
4. SDG 13: Climate Action
   • Explanation: The article explicitly mentions that its findings provide “valuable policy insights for regulatory authorities to guide enterprises to achieve carbon neutrality and peaking.” This directly links the study’s implications to the broader goals of combating climate change and its impacts, which is the central theme of SDG 13.
5. SDG 8: Decent Work and Economic Growth
   • Explanation: The article highlights that green innovation is not just an environmental obligation but also a driver of economic benefits. It notes that advancing green innovation delivers “enduring financial gains by enhancing energy efficiency, lowering material usage, and unlocking growth potential in environmentally conscious markets.” This aligns with the goal of promoting sustainable economic growth by decoupling it from environmental degradation.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the article’s detailed discussion, several specific SDG targets can be identified:

1. Under SDG 9 (Industry, Innovation and Infrastructure):
   • Target 9.4: “By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes…”
     • Justification: The article’s focus on “green transformation,” “environmentally friendly technologies,” and helping firms “upgrade their environmentally friendly production facilities” directly supports this target.
   • Target 9.5: “Enhance scientific research, upgrade the technological capabilities of industrial sectors in all countries… encouraging innovation…”
     • Justification: The study empirically demonstrates that alliances “substantially boosted firms’ green innovation efforts” and facilitate “green technology R&D,” which is the essence of this target.
2. Under SDG 17 (Partnerships for the Goals):
   • Target 17.16: “Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources…”
     • Justification: The article describes how alliances “promote the sharing of capital, equipment, and policy-related information,” “facilitating environmental knowledge spillovers,” and sharing “eco-friendly technologies.” This is a direct example of the partnerships described in this target.
   • Target 17.17: “Encourage and promote effective public, public-private and civil society partnerships…”
     • Justification: The study analyzes the effectiveness of different partnership models (“equity-and non-equity-based environmental strategic alliances”) and the influence of various stakeholders, including “local authorities” (public) and “green-focused institutional investors” (private/civil society), on these partnerships.
3. Under SDG 12 (Responsible Consumption and Production):
   • Target 12.6: “Encourage companies, especially large and transnational companies, to adopt sustainable practices…”
     • Justification: The article investigates the drivers that push firms toward green innovation, such as “regulatory pressures,” “green-focused institutional investors,” and alliances themselves, which serve as a mechanism for adopting “sustainable management approaches.”
4. Under SDG 13 (Climate Action):
   • Target 13.2: “Integrate climate change measures into national policies, strategies and planning.”
     • Justification: The article provides “policy insights for regulatory authorities” and discusses how the “environmental focus of both local authorities and firms” can intensify the positive impact of alliances, highlighting the importance of integrating environmental concerns into governance and strategy to achieve goals like “carbon neutrality.”

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

The article explicitly defines and uses several quantitative measures that can serve as direct or implied indicators for tracking progress towards the identified SDG targets.

1. Indicator for Green Innovation (related to Target 9.5):
   • Indicator Mentioned: The primary variable, “Green innovation (Ginv),” is measured as “the natural logarithm of the annual count of green invention patents granted to a firm.” An alternative measure, “Ginv1,” is also constructed by aggregating “the total number of the four types of green patents” (invention and utility model, independent and joint).
   • Explanation: This provides a concrete, quantifiable metric to measure the output of innovation activities, directly reflecting progress in enhancing technological capabilities and encouraging innovation.
2. Indicator for Partnerships (related to Target 17.17):
   • Indicator Mentioned: The study uses a binary variable, “Environmental protection strategic alliance (GAlliance),” which “indicates whether a firm forms a strategic alliance centred on environmental protection during a specific year.” It also analyzes the type of alliance (equity vs. non-equity).
   • Explanation: The number, frequency, and type of such alliances can be used as a direct indicator to measure the formation and effectiveness of public-private partnerships for sustainable development.
3. Indicator for Environmental Investment (related to Target 9.4):
   • Indicator Mentioned: The article measures “environmental protection investment” using “capital expenditures related to environmental protection recorded under the ‘construction in progress’ account as the proxy variable,” standardized by total revenue.
   • Explanation: This serves as a financial indicator to track the level of investment being directed towards upgrading industries and adopting clean technologies, which is crucial for making industries sustainable.
4. Indicator for Knowledge Transfer (related to Target 17.16):
   • Indicator Mentioned: “Environmental knowledge spillovers” are measured by “the number of green invention patents filed by a firm’s alliance partners within the same year.”
   • Explanation: This acts as a proxy indicator to measure the intensity of knowledge and technology sharing within partnerships, a key component of Target 17.16.
5. Indicator for Government Policy Focus (related to Target 13.2):
   • Indicator Mentioned: The study measures “local governments ‘environmental concerns'” by utilizing “the occurrence rate of environment-related terminology in municipal government work reports.”
   • Explanation: This text-based indicator provides a novel way to quantify the extent to which climate and environmental measures are being integrated into local government strategies and planning.

4. Summary Table of SDGs, Targets, and Indicators

Source: nature.com