Over the past three decades, China’s rapid economic growth has been accompanied by significant environmental degradation, making sustainable development a critical national priority. Green innovation has emerged as a key response, though most studies focus on national or regional trends rather than firm-level dynamics. This study seeks to address this gap by conducting empirical research on 1049 publicly traded manufacturing enterprises spanning the years 2000–2017. Our findings reveal that companies are influenced by environmental pollution, prompting them to engage in greater levels of green innovation. Notably, this stimulus has a more pronounced effect on the encouragement of high-value, invention-based green innovation. State-owned enterprises exhibit a greater degree of activity in the realm of green innovation compared to their non-state-owned counterparts. Additionally, large enterprises and technologically advanced companies with stronger financial capabilities exhibit a greater inclination towards pursuing green innovation. Moreover, businesses located in regions characterized by high levels of pollution tend to intensify their green innovation efforts when faced with worsening air pollution conditions.