1. Introduction
The world has reached a consensus that both economic development and environmental protection are needed. In recent years, among a series of environmental issues, the world is most concerned about the greenhouse effect, and has invested significant manpower and money. However, it is a harsh fact that we have overlooked some hidden environmental problems, such as soil pollution. From April 2005 to December 2013, China conducted its first national soil pollution survey. The 2014 National Soil Pollution Bulletin showed that 16.1% of the Chinese soil was polluted, 82% contained toxic inorganic pollutants, the most common being heavy metals such as cadmium, mercury, arsenic, chromium, and lead. Industrial plant waste and mining operations is a main human cause of widespread soil pollution (Chen et al., 2014) [
1]. Thus, the impact of mining activities on the ecological environment has aroused widespread concern (Wang et al., 2022; Deng et al., 2022) [
2,
3].
Green innovation can reduce the emission of pollutants and has an important role in improving the environment (Xu et al., 2021; Lin and Ma 2022; Ali et al., 2022) [
4,
5,
6]. On the one hand, based on the existing literature, green strategies (Sun and Sun, 2021) [
7], market orientation (Du and Wang, 2022) [
8], corporate social responsibility (Yuan and Cao, 2022) [
9], etc., have a positive impact on green innovation of enterprises. On the other hand, as the Porter hypothesis suggests, a strict and flexible environmental regime can promote innovation of enterprises (Porter and Van der Linde, 1995) [
10]. Compared with other factors, environmental regimes are formal and mandatory, and their impact on green innovation is more stable. In China, the positive impact of environmental regimes on green innovation has been widely demonstrated (Liu et al., 2020; Yao et al., 2021; Gao and Wang, 2021; Du et al., 2021) [
11,
12,
13,
14]. Furthermore, scholars have distinguished between the quantity and quality of green innovation, examining the different effects of these factors (Rao et al., 2022; Huang et al., 2022; Wang et al., 2022) [
15,
16,
17].
Specifically for industrial and mining enterprises, we are curious whether environmental regimes can have a positive impact on green innovation. Aron and Molina (2020) [
18] found that in Peru environmental regulation created more pressure on industrial and mining enterprises to promote their green innovation. Qi et al. (2019) [
19] found that in China the construction of green mines facilitates green innovation in mining enterprises. Furthermore, Zhou et al. (2021) [
20] found that the positive impact of environmental regulation on green innovation of mining enterprises mainly came from the role of environmental legitimacy guarantees. This implies that the Porter hypothesis is also valid in industrial and mining enterprises. However, few scholars have further explored the different impacts of a concrete form of environmental regime on the quantity and quality of green innovation in industrial and mining firms, as well as their potential mechanisms. This provides the motivation for our study.
China is increasingly known for its ambitions towards an ‘ecological civilization’ and a circular economy (Nechifor et al., 2020) [
21]. Since the 18th Party Congress, the construction of ecological civilization has been incorporated into the five-sphere integrated plan, and China has put forward the scientific assertion that “Lucid waters and lush mountains are invaluable assets”. Meanwhile, the “Soil Pollution Prevention and Control Action Plan” (The Soil Plan) implemented in 2016 provides a good quasi-natural experiment for our study. More specific arrangements are made for soil environmental protection in industrial and mining enterprises. As a concrete form of environmental regime, the Soil Plan imposes new constraints on industrial and mining enterprises, and whether it will further affect green innovation has not been fully explored. The purpose of this paper is to investigate the impact of the Soil Plan on the quantity and quality of green innovation in industrial and mining enterprises, and its potential mechanisms.
Thus, based on a panel of 453 industrial and mining enterprises in Shanghai and Shenzhen A-shares in China from 2011 to 2020, the paper investigates whether the Soil Plan can promote green innovation to increase quantity and improve quality. Meanwhile, based on information asymmetry theory, it explores whether financing constraints play a mechanism effect in this. The paper found that: (1) the Soil Plan significantly contributed to the increase in green innovation and quality of industrial and mining enterprises in the pilot areas, and the findings still hold after a series of robustness tests. (2) The mechanism test found that the Soil Plan significantly contributed to the increase in green innovation and quality of industrial and mining enterprises by alleviating their financing constraints but did not contribute to the increase in green innovation. (3) Further study found that the effect of the Soil Plan on the increase in green innovation and quality was stronger in the sample with a more independent board of directors and the transformation of digital mines.
This paper makes three contributions: First, it is a quasi-experimental study of the policy effects of the Soil Plan based on a difference-in-differences (DID) model, which enriches the results related to soil pollution prevention and control and industrial and mining enterprises; the current research results related to soil pollution prevention and control mainly focus on the policy interpretation of the background, provisions and significance (Qu et al., 2016; Wang et al., 2016) [
22,
23]. Few empirical studies have been conducted in the literature specifically on the effects of the Soil Plan on the treatment of enterprises.
Second, based on the theory of information asymmetry and financing constraints, this paper explores the mechanisms underlying the ability of the Soil Plan to improve the quality of green innovation, in contrast with other environmental protection systems, and enriches the research findings in the field of environmental protection systems. The Porter hypothesis has been confirmed in the literature, and some scholars have further focused on the issue of innovation quality, but there is little evidence that China’s environmental protection system can improve the quality of green innovation on an incremental basis.
Third, considering the heterogeneity, this paper explores the role of board independence and digital mine transformation in promoting green innovation and quality in enterprises based on a micro-enterprise perspective, and proposes corresponding policy recommendations. The existing literature has already provided theoretical interpretations of the effects of the implementation of the Soil Plan, but this paper provides specific recommendations for its further implementation.
2. Institutional Background and Theoretical Mechanisms
2.1. Institutional Background
Soil pollution has been a concern in China since the 1970s, but efforts have not been effective. As shown in
Table 1, in the first and second phases (the 1970s to the early 21st century), China regarded soil pollution prevention and control as selective, so local governments tended to act according to their means and enterprises seeking to maximize their profits were less likely to take substantive action. In 2013, the Standing Committee of the 12th National People’s Congress included the Soil Pollution Prevention and Control Law in its legislative plan, marking the official launch of China’s special legislation on soil pollution prevention.
In 2016, the Soil Plan was successfully launched, becoming the first programmatic document for soil pollution prevention and control in China. In order to prevent local governments and industrial and mining enterprises from selectively ignoring soil pollution prevention and control, the provisions of the Soil Plan are very systematic and targeted, with Article 18 in Chapter 6 specifying in detail how to prevent soil pollution from industrial and mining industries.
Since 2017, in 13 provinces including Inner Mongolia, Jiangxi and Henan, the strict prevention of soil contamination by mineral resources development resulted in the pilot provinces accounting for 41.9% of the 31 provinces in Chinese mainland. As shown in
Table 2, first, the development level of industrial and mining in the pilot area is high, there are more employees. Second, the production of general industrial solid wastes and hazardous solid wastes in the pilot area is also high. This shows that the pilot area is highly representative and can reflect the contradiction between the development of China’s industrial and mining industry and soil pollution. Additionally, the prevention and control targets involve several sub-sectors, including mining, non-ferrous metal smelting, petroleum processing, coking, electroplating, etc.
Combined with each province’s self-developed action plan for soil pollution prevention and control, the provisions directly related to industrial and mining enterprises are summarized as follows: (1) Clear responsibility for soil pollution prevention and control. By the principle of “who pollutes, who treats, who benefits, who is responsible”, the enterprises concerned are urged to take preventive and control measures against soil pollution promptly, and to comprehensively rectify the historical tailings ponds. (2) Strengthen soil environmental assessment and monitoring. Key regulatory enterprises will conduct annual soil environmental risk assessment and radiation monitoring, and the results will be made public. (3) Strengthen the supervision of mineral pollution sources. Implement special emission limits for key pollutants and promote the adoption of clean production processes and technologies by relevant enterprises. (4) Strengthen pollution penalties. The relevant enterprises that fail to complete the above requirements are ordered to make corrections and fined, and those that refuse to make corrections are subject to continuous daily penalties by the original penalty amount, and those with serious circumstances are ordered to cease production and shut down.
At present, the Soil Plan has begun to show results (Li et al., 2019) [
24]. The Ecological Environment Bulletin 2020 shows that China’s soil pollution prevention and control efforts have achieved substantial results. China has basically achieved the two core objectives of soil pollution prevention and control, i.e., the safe rate of contaminated arable land has reached about 90% and the safe utilization rate of contaminated land has reached more than 90%.
2.2. Theoretical Mechanisms
MM theory assumes that capital markets are perfect, that information is perfectly symmetrical and that there are no transaction costs, and that the interest rate on liabilities is risk-free. As a result, exogenous and endogenous financing can be fully substituted, and the investment behavior of a company depends only on the investment project and is not related to the capital structure. However, the assumptions of MM theory do not hold in reality. Based on the theory of information asymmetry and the theory of transaction costs, the theory of preferential financing suggests that exogenous financing costs more than endogenous financing. Therefore, the higher the information asymmetry between the firm and the external financing institution, the higher the cost of external financing (Myers and Majluf, 1984) [
25], and the difference between it and the cost of internal financing is the financing constraint.
Based on Schumpeterian innovation theory, the innovative behavior of firms is strongly influenced by the availability of finance. Compared with ordinary innovation, green innovation has higher inputs, longer cycles and more uncertain returns, and is therefore more affected by the issue of financing constraints. It has been shown that environmental information disclosure is significantly and negatively related to the cost of financing (García-Sánchez et al., 2019; Li et al., 2022) [
26,
27]. Furthermore, financing constraints caused by environmental protection problems would inhibit enterprises from carrying out green innovation (Zhai et al., 2022) [
28]. In the past, China’s emission monitoring system for air and water pollutants has been relatively well developed, but it is not mandatory to test and disclose information on the emission of soil pollutants. In addition, only a handful enterprises actively disclose information related to environmental management (Kuo et al., 2012) [
29]. Enterprises with poorer environmental performance tend to disclose more low-quality qualitative information and avoid separate disclosure and quantitative disclosure. Therefore, there is a serious information asymmetry between industrial and mining enterprises and exogenous financiers on the soil environment, and stronger financing constraints make them less willing to innovate green (Liu et al., 2021) [
30].
With the gradual expansion of green credit and green bonds by Chinese banks and other financial institutions, higher requirements are being placed on the financing qualifications of heavily polluting enterprises. However, the development of green finance has also provided more financing opportunities for enterprises with better environmental performance. With the implementation of the Soil Plan, relevant industrial and mining enterprises are required to conduct regular soil environmental monitoring and risk assessment, and to disclose the assessment results together with information on the discharge of special pollutants, fines for non-compliance and suspension of work. Therefore, the Soil Plan can alleviate the problem of information asymmetry related to the soil environment to a certain extent, reduce financing costs, and then promote green innovation. Based on this, we propose the following hypothesis:
Hypothesis 1. The Soil Plan can significantly increase the total number of green patents for industrial and mining enterprises.
In China, patent innovations can be further divided into design, utility models and invention patents. Among these, utility model patents are also known as “small inventions”. According to the relevant provisions of China’s Patent Law, a utility model patent can be applied for if it is a practical, new technical solution for the shape, construction or combination of products, and the product is protected under the law. It can be found that utility model patents require far less innovation and technology than patents for inventions, and therefore their development costs and risks are lower. In the early days, to stimulate innovative behavior, China introduced many policies to encourage enterprises to undertake research and development of utility model patents. In recent years, the number of patent applications and grants in China has grown at a rapid pace, with utility model patents accounting for over 50% of the total. However, there is a growing concern among scholars that utility model patents, while encouraging “learning innovation”, may also have a dampening effect on “independent innovation”. As Hu et al. (2017) [
31] suggest that non-innovation related motives for acquiring patents may have played an important role in the patenting surge. Furthermore, utility model patents have become a strategic act for Chinese enterprises to seek support, and innovation that only increases quantity but not quality does not promote sustainable development of enterprises (Jiang and Bai, 2022) [
32].
For green patents, China usually uses the green patent IPC classification number for matching, which is divided into two categories: green utility model patents and green invention patents. For industrial and mining enterprises, compared with green utility model patents, green invention patents can fundamentally promote their green development. On the one hand, green invention patents can give better play to the advantages of more efficiency, reduce energy consumption by transforming the original process, improve the recycling rate of tailings and slag, and thus reduce soil pollution caused by mine solid waste. On the other hand, green invention patents can give full play to their unique advantages, and gradually replace backward processes and products through green supply, green production, green recycling, etc., so as to form a unique green competitiveness. However, China’s green innovation sector is facing the problem of increasing quantity rather than improving quality. Many companies have engaged in “green speculation”, trying to create a green image through green utility model patents to alleviate the financing constraints they face. It has been documented that policies such as green credit in China have not had the positive impact of improving the quality on green innovation (Liu and Dong, 2022) [
33].
Xiang et al. (2020) [
34] found that environmental disclosure plays an important role in promoting sustainable development of enterprises by enhancing their environmental awareness. Ren et al. (2022) [
35] found that mandatory CSR disclosure in China helps promote the filing of more green utility model patents and green invention patents. Furthermore, Huang et al. (2020) [
36] found that firms, when they innovate, can exacerbate information asymmetry in the short term. Subsequently, to meet the information needs of market investors, innovative firms disclose more patent-related earnings forecasts. Similarly, investors may pay attention to the actual environmental protection effect of green innovation. Compared with other environmental protection systems, the Soil Plan provides for mandatory soil environmental testing and information disclosure, which is conducive to improving the quality of information disclosure by industrial and mining enterprises, thereby discouraging their undesirable motives of seeking support through green utility model patents. Based on this, we propose the following hypothesis.
Hypothesis 2. The Soil Plan can significantly increase the green invention patents of industrial and mining enterprises.
6. Conclusions and Insights
Based on a panel of 453 industrial and mining enterprises listed on the Shanghai and Shenzhen A-shares in China from 2011 to 2020, we use the Soil Plan promulgated by China as a quasi-natural experiment in order to investigate the impact and mechanism of soil pollution prevention and control on the green transformation of industrial and mining enterprises: (1) Soil pollution prevention and control can significantly contribute to the green innovation and quality improvement of industrial and mining enterprises. (2) Soil pollution control promotes the quality of green innovation by alleviating the financing constraints of industrial and mining enterprises, but not the quantity of incremental green innovation. (3) When the board of directors is more independent and the transformation of the digital mine is underway, the effects of the Soil Plan on the green innovation and quality improvement of industrial and mining enterprises are more significant.
The findings of this paper provide a basis for the policy effects of the Soil Plan on promoting green transformation in industrial and mining enterprises, and also identify the mechanisms underlying its promotion of green innovation and quality improvement, providing insights for future development of environmental protection systems and promotion of enterprise innovation and quality improvement. First, the prevention and control of soil pollution have been effective, and China should further implement the relevant provisions of the Soil Plan. In the future, the prevention and control of soil pollution should pay more attention to the green innovation of industrial and mining enterprises, which is the key to achieving green mines.
Second, China should coordinate the Soil Plan with policies such as green credit to guide banks and other financial institutions to reduce their financing constraints on industrial and mining enterprises with better environmental performance. Meanwhile, it should continue to place greater emphasis on the testing and disclosure of soil environmental information, and give full play to the role of green finance as an incentive for high-quality green innovation by alleviating information asymmetries.
Third, China should further guide industrial and mining companies to improve their internal governance structures and increase the independence and oversight of their boards of directors. At the same time, China should increase its support for digital mines, which will help industrial and mining companies to improve their ability to share information and integrate knowledge for green innovation, resulting in digitalization and greening work together.
This paper also has some limitations. First, we use a three-step approach in testing the mechanism, which has been suggested to have some endogeneity problems. Second, this study finds that the Soil Plan has a mechanism to alleviate the financing constraints of industrial and mining enterprises, because it will strengthen the disclosure of soil environmental information under the pressure of compliance. However, the disclosure effect has not been tested in this paper and could be added to future studies.