Abstract

There is a growing trend of firms applying emerging technologies, such as AI and alternative energy, to address climate challenges. This paper provides a systematic analysis of this new economic phenomenon, referred to as ClimateTech. We use large language model (LLM) contextual functions (e.g., dependency parsing) to analyze firm press releases and identify ClimateTech projects. Our findings indicate that early adopters of ClimateTech tend to have strong technological expertise in their leadership teams. ClimateTech investment concentrates in two distinct categories: multipurpose infrastructure and specialized environmental technologies. When examining financial value and environmental impact, we find that infrastructure technologies generate higher financial returns but have no measurable environmental impact—satisfying shareholders but not stakeholders. In contrast, specialized environmental technologies tend to produce neither significant financial returns nor environmental impact. We identify a solution for specialized environmental technology investments to achieve both financial value and environmental benefits: firms integrating emerging environmental technologies into their core business operations—rather than limiting them to side projects or image management—are more likely to balance the trade-off between shareholder value and environmental responsibility.