Do Firms Walk the Climate Talk?

Abstract

Firms talk more about the climate on earnings conference calls when climate matters are more material for a firm, when there is greater shareholder pressure or when it is better prepared for climate-related disclosure. However, there is also large unexplained variation in climate talk. In a global sample, we find that climate talk is negatively related to the change in CO2 emissions in the years after the call. However, this does not hold in the US, individualistic cultures and cultures characterized by short-term horizons. In those settings, investors also react negatively to climate talk. Overall, these results suggest that firms walk the climate talk on average, but the credibility of such talk varies across firms.

Keywords: climate talk, earnings calls, sustainability, CO2 emissions, greenwashing

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