HKS Authors

See citation below for complete author information.

Teresa and John Heinz Professor of the Practice of Environmental Policy


As climate-induced physical and transition risks to corporations are becoming more and more material, investors are increasingly scrutinizing a patchwork of voluntary climate-related communications–namely public disclosures, emission reduction commitments, and soft information from earnings calls and other public announcements. We observe, for large-cap U.S. firms, a rise in the usage of all forms of climate communication from 2010-2020. We also find evidence that a majority of firms are not decarbonizing on a sufficient trajectory to meet committed emission reduction targets. In regard to financial effects, we show that increased transparency from disclosure can offset a significant portion of the price-to-earnings discount associated with carbon emissions, especially for firms in the energy and industrial sectors. A similar effect is observed for positive climate-related sentiment during the Q&A , but not the management update section of earnings calls. Commitments are shown to have a statistically insignificant impact on valuation.


Aldy, Joseph, Patrick Bolton, Zachery Halem, Marcin T. Kacperczyk, and Peter R. Orszag. "Show and Tell: An Analysis of Corporate Climate Messaging and its Financial Impacts." April 22, 2023.