Abstract
This study investigates how extreme climate events, particularly heatwaves and cold spells, influence firms’ environmental innovation, emphasizing the mediating role of environmental concern. Utilizing data from 12,849 Spanish firms, the Eurobarometer survey, and ERA5 reanalysis weather data, the research examines both direct and indirect effects of climate extremes on eco-innovation. The results indicate that extreme heat events generally impede eco-innovation by causing operational disruptions and resource limitations. In contrast, cold spells display a more complex effect, where increased environmental concern partially mediates a positive impact on general eco-innovation. The study contributes by differentiating the effects of various climate stressors on innovation, highlighting how public environmental awareness can drive sustainable practices during cold episodes, and presenting a robust methodological framework combining causal mediation analysis with regional data. These insights offer significant implications for policymakers and businesses seeking to boost resilience and sustainability amid ongoing climate variability. Overall, the study provides insight.