Do customer climate risk perceptions promote green innovation along the supply chain?

Climate risk perceptions are increasingly influencing corporate behavior, yet their impact on green innovation along the supply chain remains insufficiently understood. We combine customer–supplier links among Chinese listed firms with a BERT-based measure of customer firms' climate-risk perceptions constructed from annual reports. We find that higher customer climate risk perceptions are associated with subsequent increases in supplier green innovation. Mechanism evidence indicates that the effect operates through customers’ market power, technology spillovers, and financial support. The effect is stronger when suppliers have greater digital capability and environmental expertise, and when customers exhibit stronger ESG performance and higher information transparency. Dynamic analyses reveal that short-run responses attenuate over time, whereas persistent signaling sustains innovation momentum. Overall, the results suggest that customer climate-risk perceptions strengthen market-based supply-chain governance and bias technical change toward greener trajectories.