Do firms walk the climate talk? *

Abstract

Managers increasingly discuss climate issues during earnings calls, but it is unclear whether such communication conveys information beyond firms' underlying climate fundamentals. Using a global sample of 4,921 firms from 2002-2024, we show that climate talk contains a sizable discretionary component-unexplained by standard firm characteristics-that predicts subsequent reductions in CO 2 emissions. The predictive power is strongest for unscripted remarks in the Q&A and for firms in sectors where near-term abatement is technologically feasible. In hard-to-abate industries such as energy and other high-materiality sectors, emission reductions materialize only over longer horizons, pointing to slower implementation rather than pure greenwashing. Stock prices react negatively to discretionary climate talk, especially when it appears in the prepared remarks of energy firms, consistent with investors interpreting such statements as announcements of costly or difficult transition steps. The reaction is also more pronounced in countries-such as the United States-characterized by high individualism and short-term orientation. Taken together, the results indicate that climate talk can signal meaningful managerial attention to the transition, but its credibility-and investors' interpretation-depend on technological feasibility and institutional context.

Keywords: Climate change, climate talk, earnings conference calls, energy, CO 2 emissions, greenwashing JEL codes: D83, G14, G34, G41, Q54

JEL Classification: D83, G14, G34, G41, Q54