The response of vegetation canopy conductance (gc) to changes in moisture availability () is a major source of uncertainty in climate projections. While vegetation typically reduces stomatal conductance during drought, accurately modeling how and to what degree stomata respond to changes in moisture availability at global scales is particularly challenging, because no global scale gc observations exist. Here, we leverage a collection of satellite, reanalysis and station‐based near‐surface air and surface temperature estimates, which are physically and statistically linked to due to the local cooling effect of gc through transpiration, to develop a novel emergent constraint of in an ensemble of Earth System Models (ESMs). We find that ESMs systematically underestimate by ∼33%, particularly in grasslands, croplands, and savannas in semi‐arid and bordering regions of the Central United States, Central Europe, Southeastern South America, Southern Africa, Eastern Australia, and parts of East Asia. We show that this underestimation occurs because ESMs inadequately reduce gc when soil moisture decreases. As gc controls carbon, water and energy fluxes, the misrepresentation of modeled contributes to biases in ESM projections of gross primary production, transpiration, and temperature during droughts. Our results suggest that the severity and duration of droughts may be misrepresented in ESMs due to the impact of sustained gc on both soil moisture dynamics and the biosphere‐atmosphere feedbacks that affect local temperatures and regional weather patterns.