The fight against climate change exposes businesses to major transition risks. To successfully navigate this challenge, businesses need to fundamentally rethink their carbon footprint, energy supplies and, in many cases, entire production chain. In a sign that they are taking this challenge seriously, many publicly traded companies in the U.S. have announced ambitious commitments to reduce future carbon emissions. In this paper we identify green pledges—decarbonization commitments—from newswires articles using AI (GPT-4). About 9% of U.S. firms have made green pledges, and these companies tend to be larger and browner than those without pledges. The announcement of a green pledge significantly raises the company’s stock price, and this stock market impact is stronger for larger and browner firms. Firms that make green pledges subsequently reduce their CO2 emissions by more than other firms, a result that alleviates concerns about ‘greenwashing’. Our evidence suggests that green pledges have material new information for investors, can reduce perceived climate transition risk, and may be the result of financial incentives for companies to reduce their carbon footprint.