IDEAS home Printed from https://ideas.repec.org/a/nat/natcom/v16y2025i1d10.1038_s41467-025-64723-1.html
   My bibliography  Save this article

Tracking business opportunities for climate solutions using AI in regulated accounting reports

Author

Listed:
  • Shirley Lu

    (Harvard University)

  • George Serafeim

    (Harvard University)

  • Simon Xu

    (Harvard University)

  • MarcAntonio Awada

    (Harvard University)

Abstract

The transition to a low-carbon economy offers substantial business opportunities, yet most research focuses on risks. This study develops a metric to identify firms advancing “climate solutions” by applying large language models to 39,710 10-K filings from 4,483 U.S. firms (2005-2022). The metric reveals a rising emphasis on climate solutions, validated by its responsiveness to policy shocks (e.g., Inflation Reduction Act) and correlation with green revenues and innovation indicators. We apply the measure to three inquiries: (i) firms engaged in climate solutions experience higher revenue growth, especially in sectors with strong intellectual property protection and technologies with high abatement potential; (ii) a modest political divide exists, with firms located in states with predominantly Republican voting patterns exhibiting lower climate solutions—a gap that narrows for low-cost technologies; and (iii) seemingly unrelated industries converge around shared technologies, reflected in higher stock return synchronicity. These results illustrate the value of AI-based analysis of regulatory filings for uncovering climate-related business opportunities.

Suggested Citation

  • Shirley Lu & George Serafeim & Simon Xu & MarcAntonio Awada, 2025. "Tracking business opportunities for climate solutions using AI in regulated accounting reports," Nature Communications, Nature, vol. 16(1), pages 1-20, December.
    • Handle: RePEc:nat:natcom:v:16:y:2025:i:1:d:10.1038_s41467-025-64723-1
    DOI: 10.1038/s41467-025-64723-1
    as

    Download full text from publisher

    File URL: https://www.nature.com/articles/s41467-025-64723-1
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1038/s41467-025-64723-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Zacharias Sautner & Laurence Van Lent & Grigory Vilkov & Ruishen Zhang, 2023. "Firm‐Level Climate Change Exposure," Journal of Finance, American Finance Association, vol. 78(3), pages 1449-1498, June.
    2. Matto Mildenberger & Peter D. Howe & Chris Miljanich, 2019. "Households with solar installations are ideologically diverse and more politically active than their neighbours," Nature Energy, Nature, vol. 4(12), pages 1033-1039, December.
    3. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
    4. Siobhan Powell & Gustavo Vianna Cezar & Liang Min & Inês M. L. Azevedo & Ram Rajagopal, 2022. "Charging infrastructure access and operation to reduce the grid impacts of deep electric vehicle adoption," Nature Energy, Nature, vol. 7(10), pages 932-945, October.
    5. Roncoroni, Alan & Battiston, Stefano & Escobar-Farfán, Luis O.L. & Martinez-Jaramillo, Serafin, 2021. "Climate risk and financial stability in the network of banks and investment funds," Journal of Financial Stability, Elsevier, vol. 54(C).
    6. Michael Ewens & Ryan H. Peters & Sean Wang, 2025. "Measuring Intangible Capital with Market Prices," Management Science, INFORMS, vol. 71(1), pages 407-427, January.
    7. Hainmueller, Jens, 2012. "Entropy Balancing for Causal Effects: A Multivariate Reweighting Method to Produce Balanced Samples in Observational Studies," Political Analysis, Cambridge University Press, vol. 20(1), pages 25-46, January.
    8. Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 52-104.
    9. Joseph E. Aldy & Maximilian Auffhammer & Maureen Cropper & Arthur Fraas & Richard Morgenstern, 2022. "Looking Back at 50 Years of the Clean Air Act," Journal of Economic Literature, American Economic Association, vol. 60(1), pages 179-232, March.
    10. Bolton, Patrick & Kacperczyk, Marcin, 2021. "Do investors care about carbon risk?," Journal of Financial Economics, Elsevier, vol. 142(2), pages 517-549.
    11. Leonid Kogan & Dimitris Papanikolaou & Amit Seru & Noah Stoffman, 2017. "Technological Innovation, Resource Allocation, and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(2), pages 665-712.
    12. repec:bla:jfinan:v:59:y:2004:i:2:p:623-650 is not listed on IDEAS
    13. Shengyu Tao & Ruifei Ma & Zixi Zhao & Guangyuan Ma & Lin Su & Heng Chang & Yuou Chen & Haizhou Liu & Zheng Liang & Tingwei Cao & Haocheng Ji & Zhiyuan Han & Minyan Lu & Huixiong Yang & Zongguo Wen & J, 2024. "Generative learning assisted state-of-health estimation for sustainable battery recycling with random retirement conditions," Nature Communications, Nature, vol. 15(1), pages 1-14, December.
    14. Jennifer L. Guelfo & P. Lee Ferguson & Jonathan Beck & Melissa Chernick & Alonso Doria-Manzur & Patrick W. Faught & Thomas Flug & Evan P. Gray & Nishad Jayasundara & Detlef R. U. Knappe & Abigail S. J, 2024. "Lithium-ion battery components are at the nexus of sustainable energy and environmental release of per- and polyfluoroalkyl substances," Nature Communications, Nature, vol. 15(1), pages 1-13, December.
    15. Shirley Lu & George Serafeim & Simon Xu & MarcAntonio Awada, 2025. "Tracking business opportunities for climate solutions using AI in regulated accounting reports," Nature Communications, Nature, vol. 16(1), pages 1-20, December.
    16. Simone Cenci & Matteo Burato & Marek Rei & Maurizio Zollo, 2023. "The alignment of companies' sustainability behavior and emissions with global climate targets," Nature Communications, Nature, vol. 14(1), pages 1-14, December.
    17. Martin Staadecker & Julia Szinai & Pedro A. Sánchez-Pérez & Sarah Kurtz & Patricia Hidalgo-Gonzalez, 2024. "The value of long-duration energy storage under various grid conditions in a zero-emissions future," Nature Communications, Nature, vol. 15(1), pages 1-15, December.
    18. Xiaoyuan Li & Denise L. Mauzerall & Mike H. Bergin, 2020. "Global reduction of solar power generation efficiency due to aerosols and panel soiling," Nature Sustainability, Nature, vol. 3(9), pages 720-727, September.
    19. Glaeser, Stephen, 2018. "The effects of proprietary information on corporate disclosure and transparency: Evidence from trade secrets," Journal of Accounting and Economics, Elsevier, vol. 66(1), pages 163-193.
    20. Matthew J. Hornsey & Emily A. Harris & Paul G. Bain & Kelly S. Fielding, 2016. "Meta-analyses of the determinants and outcomes of belief in climate change," Nature Climate Change, Nature, vol. 6(6), pages 622-626, June.
    21. J.-F. Mercure & P. Salas & P. Vercoulen & G. Semieniuk & A. Lam & H. Pollitt & P. B. Holden & N. Vakilifard & U. Chewpreecha & N. R. Edwards & J. E. Vinuales, 2021. "Reframing incentives for climate policy action," Nature Energy, Nature, vol. 6(12), pages 1133-1143, December.
    22. Stephen L. Bi & Nico Bauer & Jessica Jewell, 2023. "Coal-exit alliance must confront freeriding sectors to propel Paris-aligned momentum," Nature Climate Change, Nature, vol. 13(2), pages 130-139, February.
    23. Alexander Cheema‐Fox & Megan Czasonis & Piyush Kontu & George Serafeim, 2025. "Corporate alignment with the EU taxonomy for sustainable activities: First evidence from financial accounting data," Journal of Applied Corporate Finance, Morgan Stanley, vol. 37(2), pages 85-103, March.
    24. Aneel Iqbal & Shiva Rajgopal & Anup Srivastava & Rong Zhao, 2025. "A Better Estimate of Internally Generated Intangible Capital," Management Science, INFORMS, vol. 71(1), pages 731-752, January.
    25. Adam P. Mayer & E. Keith Smith, 2023. "Multidimensional partisanship shapes climate policy support and behaviours," Nature Climate Change, Nature, vol. 13(1), pages 32-39, January.
    26. Max Falkenberg & Alessandro Galeazzi & Maddalena Torricelli & Niccolò Di Marco & Francesca Larosa & Madalina Sas & Amin Mekacher & Warren Pearce & Fabiana Zollo & Walter Quattrociocchi & Andrea Baronc, 2022. "Growing polarization around climate change on social media," Nature Climate Change, Nature, vol. 12(12), pages 1114-1121, December.
    27. Julian F Kölbel & Markus Leippold & Jordy Rillaerts & Qian Wang, 2024. "Ask BERT: How Regulatory Disclosure of Transition and Physical Climate Risks Affects the CDS Term Structure," Journal of Financial Econometrics, Oxford University Press, vol. 22(1), pages 30-69.
    28. Jody Grewal & Edward J. Riedl & George Serafeim, 2019. "Market Reaction to Mandatory Nonfinancial Disclosure," Management Science, INFORMS, vol. 65(7), pages 3061-3084, July.
    29. Kenneth Gillingham & James H. Stock, 2018. "The Cost of Reducing Greenhouse Gas Emissions," Journal of Economic Perspectives, American Economic Association, vol. 32(4), pages 53-72, Fall.
    30. Gregor Semieniuk & Philip B. Holden & Jean-Francois Mercure & Pablo Salas & Hector Pollitt & Katharine Jobson & Pim Vercoulen & Unnada Chewpreecha & Neil R. Edwards & Jorge E. Viñuales, 2022. "Stranded fossil-fuel assets translate to major losses for investors in advanced economies," Nature Climate Change, Nature, vol. 12(6), pages 532-538, June.
    31. Leopold Peiseler & Vanessa Schenker & Karin Schatzmann & Stephan Pfister & Vanessa Wood & Tobias Schmidt, 2024. "Carbon footprint distributions of lithium-ion batteries and their materials," Nature Communications, Nature, vol. 15(1), pages 1-13, December.
    32. Blyth, William & Bradley, Richard & Bunn, Derek & Clarke, Charlie & Wilson, Tom & Yang, Ming, 2007. "Investment risks under uncertain climate change policy," Energy Policy, Elsevier, vol. 35(11), pages 5766-5773, November.
    33. Khrystyna Bochkay & Jeffrey Hales & George Serafeim, 2025. "Disclosure standards and communication norms: evidence of voluntary sustainability standards as a coordinating device for capital markets," Review of Accounting Studies, Springer, vol. 30(3), pages 3021-3064, September.
    34. Chan, Kalok & Hameed, Allaudeen, 2006. "Stock price synchronicity and analyst coverage in emerging markets," Journal of Financial Economics, Elsevier, vol. 80(1), pages 115-147, April.
    35. Michael Berkebile-Weinberg & Danielle Goldwert & Kimberly C. Doell & Jay J. Bavel & Madalina Vlasceanu, 2024. "The differential impact of climate interventions along the political divide in 60 countries," Nature Communications, Nature, vol. 15(1), pages 1-12, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shirley Lu & George Serafeim & Simon Xu & MarcAntonio Awada, 2025. "Tracking business opportunities for climate solutions using AI in regulated accounting reports," Nature Communications, Nature, vol. 16(1), pages 1-20, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hossain, Ashrafee & Masum, Abdullah-Al & Rjiba, Hatem, 2025. "Fear of fairness in courts: The impact of liberal judge ideology on corporate carbon emissions," International Review of Financial Analysis, Elsevier, vol. 101(C).
    2. Laeven, Luc & Popov, Alexander, 2023. "Carbon taxes and the geography of fossil lending," Journal of International Economics, Elsevier, vol. 144(C).
    3. Martinsson, Gustav & Sajtos, László & Strömberg, Per & Thomann, Christian, 2022. "Carbon Pricing and Firm-Level CO2 Abatement: Evidence from a Quarter of a Century-Long Panel," Misum Working Paper Series 2022-10, Stockholm School of Economics, Mistra Center for Sustainable Markets (Misum).
    4. Chen, Jianqiang & Hsieh, Pei-Fang & Hsu, Po-Hsuan & Levine, Ross, 2025. "Environmental liabilities, borrowing costs, and pollution prevention activities: The nationwide impact of the Apex Oil ruling," Journal of Corporate Finance, Elsevier, vol. 91(C).
    5. Noailly, Joëlle & Nowzohour, Laura & van den Heuvel, Matthias & Pla, Ireneu, 2024. "Heard the news? Environmental policy and clean investments," Journal of Public Economics, Elsevier, vol. 238(C).
    6. Grubb, Michael & Lange, Rutger-Jan & Cerkez, Nicolas & Sognnaes, Ida & Wieners, Claudia & Salas, Pablo, 2024. "Dynamic determinants of optimal global climate policy," Structural Change and Economic Dynamics, Elsevier, vol. 71(C), pages 490-508.
    7. Greg Tindall & Rebel A. Cole & David Javakhadze, 2025. "Innovation Responds to Climate Change Proposals," Journal of Business Ethics, Springer, vol. 198(3), pages 509-536, May.
    8. Ferriani, Fabrizio & Gazzani, Andrea, 2023. "The invasion of Ukraine and the energy crisis: Comparative advantages in equity valuations," Finance Research Letters, Elsevier, vol. 58(PD).
    9. Rahman, Sohanur, 2024. "The importance of green patents for CDS pricing: The role of environmental disclosures," Energy Economics, Elsevier, vol. 139(C).
    10. Benkraiem, Ramzi & Dimic, Nebojsa & Piljak, Vanja & Swinkels, Laurens & Vulanovic, Milos, 2025. "Media-based climate risks and international corporate bond market," Journal of International Money and Finance, Elsevier, vol. 151(C).
    11. Dobkowitz, Sonja, 2024. "Meeting Climate Targets: The role of fossil research subsidies," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302410, Verein für Socialpolitik / German Economic Association.
    12. Accetturo, Antonio & Barboni, Giorgia & Cascarano, Michele & Garcia-Appendini, Emilia & Tomasi, Marco, 2022. "Credit supply and green Investments," CAGE Online Working Paper Series 615, Competitive Advantage in the Global Economy (CAGE).
    13. Zhiyuan Li & Bing Lu & Sili Zhou, 2024. "Production Leakage: Evidence from Uncoordinated Environmental Policies," Working Papers 202413, University of Macau, Faculty of Business Administration.
    14. Drudi, Francesco & Moench, Emanuel & Holthausen, Cornelia & Weber, Pierre-François & Ferrucci, Gianluigi & Setzer, Ralph & Adao, Bernardino & Dées, Stéphane & Alogoskoufis, Spyros & Téllez, Mar Delgad, 2021. "Climate change and monetary policy in the euro area," Occasional Paper Series 271, European Central Bank.
    15. Ahlvik, Lassi & van den Bijgaart, Inge, 2024. "Screening green innovation through carbon pricing," Journal of Environmental Economics and Management, Elsevier, vol. 124(C).
    16. Matilde Faralli & Francesco Ruggiero, 2025. "The Rise of Climate Risks: Evidence from Firms' Expected Default Frequencies," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 62, Bank of Italy, Directorate General for Markets and Payment System.
    17. Michael Berkebile-Weinberg & Danielle Goldwert & Kimberly C. Doell & Jay J. Bavel & Madalina Vlasceanu, 2024. "The differential impact of climate interventions along the political divide in 60 countries," Nature Communications, Nature, vol. 15(1), pages 1-12, December.
    18. Zhangfan Cao & Chen Hua & Yan Tong & Xi Wang, 2023. "The crowding‐out effects of innovation information disclosure on peers' innovation: Evidence from innovation‐driven M&As in China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(5), pages 4883-4908, December.
    19. Glaeser, Stephen & Lang, Mark, 2024. "Measuring innovation and navigating its unique information issues: A review of the accounting literature on innovation," Journal of Accounting and Economics, Elsevier, vol. 78(2).
    20. Hossain, Ashrafee & Masum, Abdullah-Al & Benkraiem, Ramzi, 2024. "Long-term institutional investors and climate change news Beta," Journal of Corporate Finance, Elsevier, vol. 89(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nat:natcom:v:16:y:2025:i:1:d:10.1038_s41467-025-64723-1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.nature.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.