Scholars’ surprising reveal: Legacy companies, not just climate-tech firms, are driving the adoption of climate solutions

New research from Harvard Business School scholars reveals that nearly half of U.S. publicly traded companies across major industries are actively developing or selling technologies that address climate change. Surprisingly, many of these companies—such as Dow, General Motors, Valero Energy, and Archer-Daniels-Midland (ADM)—are established businesses in mature industries rather than pure climate firms, like Tesla.

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Harvard Business School Professor George Serafeim (Photo: Business Wire)

The research, led by Harvard Business School Professor George Serafeim, underscores how corporate America is increasingly embracing climate change as a significant business opportunity, rather than simply a risk to manage. And the companies doing substantive climate work represent nearly $8 trillion in market capitalization, about 20% of all U.S. market capitalization.

“Companies are now viewing climate solutions as a business opportunity, and their actions reflect this shift,” Serafeim said. “The increase in climate-focused activity signals that these firms see the transition to a low-carbon economy as a source of long-term competitive advantage.”

In a finding that some business leaders and policymakers may find surprising, the AI-driven research shows that 879 U.S. public companies are now working on technologies to address climate change. The companies span sectors from energy and agriculture to transportation and technology. About 40% of these companies are headquartered in “red states,” which supported the Republican candidate for president in the 2020 election. The research was conducted at Harvard Business School’s Data Digital Design Institute and distilled by the Institute for Business in Global Society (BiGS).

Serafeim worked on this research with Harvard Business School Assistant Professor Shirley Lu and HBS Postdoctoral Fellow Simon Xu.

Generative AI unlocks key findings

Using a large language model (LLM) powered by generative AI, the researchers processed nearly 10 million sentences from 20 years of corporate filings (10-Ks) submitted to the Securities and Exchange Commission (SEC). These filings provide investors with vital information about a company’s performance. The researchers’ goal: to help investors, business leaders, entrepreneurs, policymakers, journalists, and other stakeholders assess how public companies are addressing climate change based on the actions they report to investors and regulators.

In addition, the researchers developed a proprietary algorithm that evaluates how thousands of companies are developing and launching products and services that address climate change called the Climate Solution Measure. Using the Climate Solution Measure, the team unveiled the BiGS Climate Innovators 100, a list that highlights companies making significant strides in climate innovation—from sustainable aviation fuel to electric vehicles (EVs).

Key takeaways based on the new research:

• 45% of U.S. public companies across sectors like energy, agriculture, and transportation are developing or selling climate solutions.
  
  
  
  
• This represents a 25-percentage point increase since 2005, a twofold gain in two decades.
  
  
  
  
• Climate-focused activity increased sharply after the passage of the Inflation Reduction Act (IRA). The study found that 42% of companies reported an average rise in their climate solutions efforts in the two years following the IRA’s passage (2021-2022) compared to the two years prior (2019-2020).
  
  
  
  
• Mature companies not always known for their environmental focus are driving climate innovation.

For more information about the BiGS Climate Innovators 100 and detailed findings from this study, visit Harvard Business School’s Institute for Business in Global Society (BiGS) website.

For more information about the research, visit the Digital Data Design Institute website. https://d3harvard.lpages.co/climate-solutions/

About Harvard Business School’s Institute for Business in Global Society (BiGS)

The Institute for Business in Global Society (BiGS) at Harvard Business School explores the intersection of global business and society, providing business leaders with cutting-edge research to navigate challenges such as climate change, economic mobility, and diversity and inclusion. Each week, BiGS publishes innovative research, insights and CEO interviews to inform business practices, sharing them through platforms such as The BiGS Fix, YouTube, and LinkedIn.

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