Study Overview
The study examines whether and how government procurement influences firms’ climate-related disclosures, environmental commitments, and real sustainability actions. The key research questions are: Do firms increase climate disclosures in response to expanded government procurement opportunities? Are such disclosures credible signals of future climate-related action? Do procurement-influenced disclosures lead to improved environmental outcomes? The authors use a triple-difference (DDD) design, leveraging an exogenous shock to federal funding allocations caused by revised county-level population estimates from the 2010 U.S. Census. They analyze 15,935 firm-year observations from 2008–2017, combining data on earnings call disclosures, government contract exposure (from BEA IO tables), and census-based procurement shocks. The study uses textual analysis of earnings call transcripts to measure climate disclosures and corroborates results with alternative disclosure channels (10-K MD&A, ESG reports). Environmental outcomes are validated using data on toxic emissions (TRI database) and green patent filings.
Study Results
Firms with high exposure to government contracts significantly increased their climate-related disclosures following an exogenous increase in local procurement opportunities (driven by revised 2010 census population estimates). These disclosures were more positive in tone, focused on investment opportunities rather than risk, and were consistent across multiple channels (earnings calls, 10-Ks, and ESG reports). Firms that increased climate disclosure were more likely to win government contracts. These firms also reduced toxic emissions and increased green patent filings, suggesting real environmental actions accompanied the disclosures.
News & media
The US government’s $5 trillion purchasing power has made companies greener, study finds
December 3, 2024
When the U.S. government flexes its $5 trillion annual purchasing power to encourage environmental progress, companies listen—and act. A new study from the UC Berkeley’s Haas School of Business shows that firms have reduced toxic emissions, developed greener products, and taken concrete steps to address climate change in their pursuit of government contracts.