Modern Economics & Management Forum

Currently, global climate change is becoming increasingly severe. Under the urgent situation of global response to climate change, corporate carbon performance has become a key indicator to measure the ability of sustainable development and fulfillment of corporate social responsibility. As the core force in corporate strategic decision-making, directors and senior managers have important responsibilities in addressing corporate carbon risks and improving carbon performance. However, they face many uncertainties and legal risks in the course of fulfilling these responsibilities. Directors and officers liability insurance has emerged as an important enterprise risk management tool. Using the panel data of listed companies from 2013-2023 as the research samples, this paper empirically investigates the relationship between the directors' and officers' liability insurance and the carbon performance of enterprises and its mechanism of action, and the study shows that the directors' and officers' liability insurance has a significant positive contribution to the carbon performance of enterprises. Green technology innovation plays a mediating role in the relationship between directors' liability insurance and corporate carbon performance. Heterogeneity analysis reveals that directors' liability insurance has a more significant effect on carbon performance in non-state-owned enterprises than in state-owned enterprises.