<p>Enterprises play a pivotal role in driving economic growth, attaining carbon emission reduction targets, and contributing to the realization of the “Dual Carbon” goals. The government is equally committed to facilitating these efforts through policies such as environmental subsidies. Utilizing data from Chinese A-share listed companies spanning 2009 to 2021, this study employs an OLS model to empirically analyze the impact and underlying mechanisms of environmental subsidies on corporate carbon emissions. Our findings indicate that environmental subsidies significantly reduce corporate carbon emissions, a result that remains robust across various tests, including 2SLS, PSM, and other robustness checks. Further analysis reveals that executives with environmental backgrounds can amplify the carbon emission reduction effect of environmental subsidies. Their backgrounds guide companies’ capital allocation toward environmental protection and innovation, fostering environmental governance and green output. Additionally, these backgrounds increase the appeal to green investors, further enhancing the suppressive effect on corporate carbon emissions. This study highlights the effectiveness of environmental subsidies in promoting corporate carbon reductions. By refining subsidy policies and fostering environmentally-aware leadership, policymakers can enhance policy accuracy, enabling businesses to optimize the use of environmental funds and attract green investments, thus accelerating the transition to sustainable development.</p> Graphical abstract <p></p>