We identify corporate commitments for reductions of greenhouse gas emissions—green pledges—from news articles using a large language model. About 8% of publicly traded U.S. companies have made green pledges, and these companies tend to be larger and browner than those without pledges. Announcements of green pledges significantly and persistently raise stock prices, consistent with reductions in the carbon premium. Firms that make green pledges subsequently reduce their CO2 emissions. Our evidence suggests that green pledges are credible, have material new information for investors, and can reduce perceived transition risk.
Suggested citation:
Bauer, Michael, Daniel Huber, Eric Offner, Marlene Renkel and Ole Wilms. 2024. “Corporate Green Pledges.” Federal Reserve Bank of San Francisco Working Paper 2024-36. https://doi.org/10.24148/wp2024-36