This study examines whether and how climate threats (droughts) affect the innovation activities of firms in food industries around the world. We find that firms in countries with a less positive Palmer Drought Severity Index (PDSI), i.e., with more drought-like conditions, file more drought-related patents and that such patents receive higher citations in the future. Such innovation activities are not found in industries unlikely affected by drought. The association between drought-like conditions and innovation is stronger in countries with more human capital, better capital market development, and a national culture with a long-term orientation. Finally, we provide suggestive evidence that national innovation activities can reduce the exposure of corporate profits to climate threats.