This paper studies whether climate transition risks affect manufacturing firms’ real investment decisions by exploiting the state-level adoption of the Renewable Portfolio Standards (RPS), a set of prominent energy and environmental regulations in the U.S. from 1984–2022. Using a staggered difference-in-differences analysis, we show that while these programs impose substantial compliance costs on emission sources and result in a marked increase in electricity prices, they do not alter manufacturers’ capital expenditures, mergers and acquisitions, and alliance formation. This finding survives a battery of robustness checks. It broadly persists in cross-sectional tests of firms with varied exposure to RPS, in different size groups, and with varying degrees of financial constraints, operating leverage, market competition, and corporate governance quality. Only manufacturing firms from more competitive markets reduce their capital expenditures after RPS’ adoption. Furthermore, our results show that RPS do not influence other firm decisions and outcomes, such as employment growth, innovation, and firm performance. Our study documents novel evidence of manufacturers’ notable resilience to transition risks associated with energy and environmental policies. Our findings provide implications for the debate on the benefits and costs of regulations tackling climate change and call for further research on firms’ climate adaptation strategies.