Climate action isn't just good for the planet: It's increasingly good for business. According to CDP's groundbreaking 2025 Disclosure Dividend report, companies that measure and manage their environmental risks are unlocking massive financial returns. In fact, companies that identified environmental opportunities unlocked a staggering $4.4 trillion in opportunity value in 2024 alone, with another $13.2 trillion in potential upside yet to be realized. 

But here's the kicker: Every $1 spent on addressing physical climate risks could deliver a return of up to $21 for some firms, with an average return of up to $7. That's not just a disclosure dividend; it's a climate innovation goldmine. 

For companies developing the technologies that will power our clean energy future, there's another piece of good news hiding in plain sight: The R&D tax credits that can help fund this critical work. 

The Climate Innovation Imperative 

The numbers paint a stark picture of both risk and opportunity. Environmental risk is financial risk, and the costs are accelerating. Ignoring the risks will cost the global economy up to US$38 trillion by 2050, which is more than a third of projected global GDP. 

Companies are already feeling the pinch. Cocoa prices have hit record highs due to extreme weather in West Africa, which is home to 80% of the world's total cocoa output. In Taiwan, droughts have shuttered semiconductor plants and forced companies to bring in water on trucks. Insurance premiums in the United States have doubled since 2017 due to huge increases in climate-related disaster spending and federal aid. 

But smart companies aren't just managing climate risks but innovating their way to new opportunities. And that's where R&D tax credits come in. 

Where Innovation Meets Incentives 

The beauty of climate innovation is that it often qualifies for substantial R&D tax credit benefits. Whether you're developing next-generation battery technology, creating more efficient solar panels, or designing smart grid systems, your climate-focused R&D activities could be eligible for significant tax savings. 

Here's what climate innovators should know about R&D tax credits: 

The Four-Part Qualifying Test 

Your climate innovation projects likely qualify if they meet these criteria: 

  1. Purpose: You're creating or improving products, processes, or techniques related to sustainability, energy efficiency, or emissions reduction 
  2. Technical nature: The work involves engineering, chemistry, physics, or other hard sciences 
  3. Uncertainty elimination: You're working to resolve technical challenges or unknowns 
  4. Experimentation process: Your team is testing, modeling, or prototyping solutions 

Climate Innovation That Often Qualifies 

The opportunities are broader than many companies realize: 

  • Clean energy technologies: Solar panel efficiency improvements, wind turbine design optimization, and energy storage solutions 
  • Carbon capture and reduction: Developing tech to capture carbon emissions or reduce greenhouse gases is vital. These projects are crucial for fighting climate change and qualify for R&D tax credits 
  • Smart grid technology: Innovations that improve the reliability and efficiency of electrical grids qualify. Integrating renewables into the grid is a key part of this 
  • Sustainable materials: Research into eco-friendly alternatives for manufacturing, construction, or packaging 
  • Environmental cleanup tech: Developing new water purifiers or air pollution controls qualifies. Both new tech and major improvements to existing systems count 
  • Green building innovations: Energy-efficient HVAC systems, smart building controls, and sustainable construction materials 

Maximizing Your Climate R&D Credits 

United States: Federal and State Opportunities 

The federal R&D tax credit can provide up to a 20% credit on qualifying expenses, including employee wages, supplies, contract research, and patent costs. But the benefits don't stop there, as many states offer additional R&D incentives that can stack with federal benefits. 

The Inflation Reduction Act has also created additional opportunities, increasing the maximum credit amount for capturing and sequestering carbon oxide from $50 per metric ton to $85 per metric ton (and $180 per metric ton for carbon dioxide captured using direct air capture technology). For companies working on carbon capture technologies, this represents a significant boost to the financial case for innovation. 

Canada: SR&ED and Beyond 

Canada's Scientific Research and Experimental Development (SR&ED) program is particularly generous for climate innovation. The program provides: 

  • Up to 35% refundable tax credits for eligible small businesses 
  • Up to 15% non-refundable tax credits for larger companies 
  • Enhanced rates for Canadian-controlled private corporations 

Canadian companies are already seeing the climate opportunity: Based on median values, Canadian firms identified $72 million in potential gains per company from environmental opportunities, which is among the highest globally. 

Beyond the Credits: Building Climate Resilience 

The CDP report reveals that successful climate action goes beyond individual projects, requiring systematic thinking. Over 90% of large corporates already have a process for identifying and assessing their environmental dependencies, impacts, risks and opportunities, or intend to do so within the next two years. 

Here's how leading companies are approaching climate innovation: 

Supply Chain Integration: 75% of a company's emissions come from its suppliers, on average. Companies like Cellnex are using financial incentives to engage suppliers in climate action, with suppliers offered financial incentives being 52% more likely to cut their emissions compared to training. 

Strategic Investment Planning: A median $33.1 million worth of opportunities per company could await firms that take environmental action, for just $4.6 million in costs to realize them. Smart companies are using R&D credits to reduce those costs even further. 

Long-term Vision: Despite significant opportunities in the green economy, over half of companies do not offer low-carbon or low-water impact goods and services. This represents a massive first-mover advantage for companies willing to invest in climate innovation today. 

The Boast Advantage: Turning Climate Innovation into Tax Savings 

At Boast, we've seen firsthand how R&D tax credits can accelerate climate innovation. Our clients in the clean technology sector regularly recover 15-30% of their R&D investments through strategic credit optimization. That's money that can be reinvested into the next breakthrough technology or scaled into commercial deployment. 

Here's how we help climate innovators maximize their returns: 

Comprehensive Activity Identification: We work with your technical teams to identify all qualifying R&D activities, from early-stage research through prototype development and process optimization. 

Cross-Border Optimization: For companies operating in both the US and Canada, we ensure you're maximizing credits in both jurisdictions while avoiding double-dipping issues. 

Strategic Planning: We help you structure your R&D activities to optimize credit eligibility while supporting your technical goals. 

Documentation Excellence: We ensure your credit claims are audit-ready with detailed technical documentation that clearly demonstrates the innovation and uncertainty resolution involved. 

The Climate Innovation Imperative 

The window for climate action is narrowing, but the business case has never been stronger. Companies that proactively act on environmental risks and opportunities are now seeing substantial financial rewards. 

For companies driving climate innovation, R&D tax credits aren't just a nice-to-have, but a strategic tool for accelerating the transition to a clean energy economy while building competitive advantage. 

The question isn't whether your climate innovation work qualifies for R&D credits. It's whether you're claiming everything you're entitled to. 

Ready to turn your climate innovation into tax savings? Contact Boast today to discover how much your sustainability R&D could be worth. With the right strategy, your path to net-zero could also be your path to significant tax relief.