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Weathering AI: artificial intelligence, climate change, and the Paris agreement

Nov 2026 · Journal of Sustainable Finance & Investment · 67 references
Financial Markets and Investment Strategies

Abstract

We explore the impact of artificial intelligence (AI) workforce adoption on shareholder value in the context of climate change, using stock market reactions to the Paris Agreement as a natural experiment. Based on a large sample of publicly listed U.S. companies and leveraging a novel measure of AI-skilled employees derived from large-scale resume data, we provide empirical evidence that AI workforce adoption significantly enhances cumulative abnormal returns during this critical policy event. Firms with greater climate change exposure derive smaller benefits from AI adoption, likely because of competing priorities between investing in AI initiatives and addressing climate-related strategies. Moreover, AI adoption enhances R&D efforts, signaling strong innovation potential, but raises concerns about resource allocation in highly profitable firms. Finally, we demonstrate that abnormal returns attributable to AI workforce adoption predict long-term firm value, emphasizing AI's strategic importance in driving shareholder value and adaptability in a climate-conscious economy.

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