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Purpose The purpose of this study is to investigate how the adoption of executive compensation clawbacks affects the climate engagement initiatives of firms listed in the US Based on agency theory, we test two competing arguments – (1) the proactive risk management view and (2) the excessive caution view – to examine whether clawback provisions improve or constrain corporate climate engagement efforts. Design/methodology/approach Our sample includes firms listed in the US from 1996 to 2017. We measure corporate climate engagement by creating a Climate Engagement Index (CINDEX) based on four variables: (1) the appointment of sustainability executives, (2) Carbon Disclosure Project reporting, (3) climate-related lobbying and (4) pro-climate coalition membership. To investigate causality and mitigate possible endogeneity issues, we employ several empirical methods, including propensity score matching, instrumental variable regression and a battery of robustness tests. Findings Our results support the proactive risk management view. We find that clawback provisions increase corporate climate engagement. Specifically, firms adopting clawback provisions exhibit an increase in climate engagement of approximately 0.12 standard deviations relative to firms without such provisions. Furthermore, we show that the positive effect of clawback provisions persists across both environmentally sensitive and non-sensitive industries, as well as in firms with or without ESG-linked compensation policies. Finally, we document that climate engagement initiatives driven by clawback provisions reduce firms' exposure to climate change risks. Practical implications Our results have practical implications, showing that clawback provisions are valuable governance tools that promote corporate climate engagement and help mitigate climate-related risks. Boards, managers and investors should consider clawbacks not only as safeguards against misconduct but also as mechanisms to align executive incentives with environmental objectives. Policymakers and regulators have a clear role in incorporating clawback provisions into sustainability frameworks to strengthen corporate accountability and support long-term climate goals. Originality/value Our study extends the existing literature on clawback provisions beyond financial outcomes by linking them to corporate sustainability. We identify clawback provisions as a key governance mechanism for promoting climate engagement and demonstrate their effectiveness across various organizational contexts. This contributes to a deeper understanding of how compensation-based governance mechanisms affect environmental performance.