UNIVERSITY OF COLOGNE

Climate change has been seen as a risk, requiring mitigation, with marketing having a limited role. In contrast, the authors integrate insights from text analysis of managerial interviews and climate discussion in firm annual reports with institutional logics and signaling research to conceptualize climate marketing strategies as leveraging climate-related opportunities to deliver shareholder value. The climate marketing strategies disclosed serve as intent signals of a shareholder greening choice, while the firm’s capabilities act as quality signals moderating the intent signals thereby enhancing their credibility to investors. The authors use deep learning and econometric methods to test their theory on a panel dataset of over 52,000 firm-quarter observations. The econometric analysis that accounts for endogeneity shows that a 10% increase in the firm’s climate market assessment and product development disclosures translates into a 0.3% increase in firm value. Firms’ marketing capabilities and climate supply chain partnerships that serve as signal quality proxies positively moderate the effect. Additionally, firms’ ambidextrous capabilities strengthen the positive moderation of climate supply chain partnerships. Using causal forests to examine the heterogeneous stock market response to climate marketing strategy, the authors find the response to be stronger for firms that are smaller, more profitable, operate in less competitive industries, face greater climate risks, have a higher share of institutional investors, and audit their sustainability reports. They also find that firms face a greenwashing penalty as indicated by a weaker response for disclosures of firms from extraction and mining industries, and firms with emissions higher than the industry average.