<p>This study investigates the influence of managerial climate awareness (MCA) on firms’ earnings management using a sample of Chinese listed firms from 2004 to 2023. Utilising quantile regression analysis, we demonstrate a non-linear relationship that MCA encourages earnings management at low manipulation levels but discourages it at high levels. The study employs a climate-embedded managerial decision framework, showing that the impact of managerial climate awareness varies across different levels of earnings management. This highlights managers’ trade-off between various goals in the decision-making processes with the presence of climate awareness. We also find that internal factors, such as executive pay disparity and career concern, significantly amplify climate-conscious managers’ earnings manipulation incentives, as these factors tend to intensify their pursuit of self-interest. Conversely, external environmental scrutiny deters such engagement, as high levels of earnings management, when uncovered, can result in considerable political costs. This study provides a new understanding of how climate-aware managers make financial reporting decisions and calls for synergistic policy integrating corporate governance and external oversight to constrain opportunistic earnings management.</p>