Urban Climate Risk Governance and Corporate Energy Intensity: Evidence From China's Climate Adaptation City Pilots

Abstract

Climate shocks can raise firms’ energy use by disrupting production, triggering repeated equipment shutdowns and restarts, and requiring temporary operational adjustments. This study examines whether urban adaptation governance reduces these frictions. Using nonfinancial A‐share firms listed in Shanghai and Shenzhen from 2012 to 2025, we construct a firm–year panel of disclosed physical energy inputs and exploit the staggered rollout of China's Climate Adaptation City Pilots. Firm and year fixed‐effects estimates show a significant decline in energy input intensity after cities enter the effective pilot period, with no systematic pretreatment differences. The result is robust to matched difference‐in‐differences, double machine learning, placebo timing, alternative measures, sample adjustments, and alternative policy‐timing specifications. Energy‐input and revenue‐side analyses indicate that the decline is primarily reflected in lower aggregate energy inputs rather than revenue expansion. The mechanism analysis provides evidence consistent with a pollution‐control practices channel. The effect is stronger for firms with greater energy dependence, firms in cities with higher baseline pollution pressure, and firms with lower pre‐existing environmental‐governance investment, but weakens as managerial environmental‐governance cognition and the breadth of city energy‐transition governance agendas increase. Urban risk governance can therefore influence firms’ real resource allocation by improving the operating conditions of production.