When a CEO speaks about climate risk in one year's annual report, does that language carry more weight if it returns almost identically the next year? A new study suggests the answer depends entirely on who is leading the company. Researchers from the University of Turku examined 2,232 U.S. companies across nearly two decades and discovered something counterintuitive: the most capable executives use remarkably consistent climate-risk language from year to year, and this repetition signals something valuable rather than lazy boilerplate.
Climate disclosures matter enormously in a world where investors, regulators, and the public are trying to understand how companies plan to navigate extreme weather, carbon regulation, and the transition to cleaner energy. Because these risks remain uncertain and forward-looking, company leaders hold considerable power over what gets communicated and how. That discretion is where managerial ability enters the picture.
Javad Rajabalizadeh, a postdoctoral researcher at the University of Turku, led the study published in Business Strategy and the Environment. His team analyzed 12,533 firm-year observations between 2005 and 2023, comparing climate-related sentences in consecutive annual reports. To measure CEO managerial ability, they used an established metric that tracks how efficiently managers convert company resources into revenue after adjusting for firm characteristics. They then tested their findings across six different measures, including an artificial intelligence method sophisticated enough to recognize similar meanings even when the exact words change.
The pattern that emerged was striking: across all measures tested, higher managerial ability was associated with greater repetition of climate disclosures. But here's where the research challenges a common assumption. Most observers have written off repeated language in corporate filings as mere boilerplate—lazy copying from year to year. Rajabalizadeh's findings tell a more nuanced story. "Under capable leadership, repetition may also signal continuity, coherence and a deliberate long-term approach to communicating climate risks," he explains. In other words, when a strong CEO maintains consistent climate language, it may reflect not carelessness but strategic intent: a steady message to investors about the company's enduring understanding of its climate risks.
The implications ripple outward as climate reporting grows increasingly central to investment decisions and regulatory oversight. Boards, investors, and regulators now have reason to think differently about what repetition actually means. Rather than dismissing identical language as boilerplate, they might ask whether it reflects a company's sustained grip on its climate strategy. Yet Rajabalizadeh offers an important caution: "Repetition alone does not reveal whether a disclosure is useful or inadequate. It should be considered together with company circumstances, changing risks and the quality of the information provided."
The research examined only mandatory U.S. filings and establishes a robust association rather than direct causation. Still, Rajabalizadeh sees the insight extending beyond American shores. "Although our study examines U.S. companies, its central insight may also be relevant in Finland and other countries: where climate reporting requires managerial judgment, the capabilities of company leaders may shape how consistently climate risks are communicated over time," he notes. As the global economy grapples with climate transition, understanding the relationship between leadership quality and honest, consistent risk communication has never been more vital.