Corporate Green Pledges (joint with M. Bauer, E. Offner and M. Renkel)

Abstract: We identify announcements of 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.