["Business Ethics, the Environment &Responsibility, EarlyView. ", "\nABSTRACT\nThis study investigates whether environmentally responsible firms—measured by their green and low‐carbon level—face lower tail risks, using data from Chinese listed firms between 2011 and 2022. The findings suggest that one standard deviation increases in green and low‐carbon level lead to a 0.71% decrease in left‐tail risk and a 0.61% decrease in extreme return. Specifically, the reduction in left‐tail risk implies a reduction in the potential for extreme losses. The reduction in extreme return represents a reduction in the likelihood of price bubbles, which is generally desirable for stability. After considering the robustness tests and endogeneity problems, the findings are still robust. The underlying mechanisms suggest that institutional investors' ownership, corporate reputation, and organizational resilience are possible paths that green and low‐carbon affect tail risks. Further analyses indicate that the negative effects of green and low‐carbon level on tail risks are more significant in firms with high levels of digitization, high social trust, and strong environmental regulatory intensity. Our findings provide significant insights for policy‐makers and researchers seeking to promote sustainable development and decrease tail risks.\n"]