Testing the Ambition Loop: Do Country- and Company-Level Net-Zero Targets Reinforce Each Other? A Global Comparison

Abstract

One theory about company- and country-level climate actions is that they interact with one another through a mutually reinforcing “ambition loop”. Using publicly available data on country- and company-level net-zero targets, our econometric analysis reveals a positive relationship between state and company: A country introducing a domestic net-zero target in law increases the likelihood of companies introducing their own voluntary targets and vice-versa. Our findings offer important insights into the mechanisms of climate governance—knowledge that will be critical if we are to meet global net-zero targets by 2050.

Keywords:

• Ambition loop
• climate targets
• climate law
• global comparison
• net-zero targets

Acknowledgments

The authors acknowledge funding from the Grantham Foundation for the Protection of the Environment and the University of Oxford Strategic Research Fund through Oxford Net Zero.

Disclosure Statement

No potential conflict of interest was reported by the authors.

Supplementary Material

Supplementary data for this article can be accessed at https://doi.org/10.1080/13876988.2024.2317949

Notes

1. Online Appendix Table A1 lists and summarizes a selection of literature that were cited in this paper.

2. NZT database is available at https://zerotracker.net/.

3. Our observation period is 1990–2022. However, since institutional quality during the pandemic can be questionable, we averaged it over the previous 10 years.

4. CCLW database is available at https://climate-laws.org/.

5. CCLW is a live database; this number is correct as of August 25, 2023.

6. That civil society actors (and others) play a role in developing and disseminating norms is understood as a driver of change in polycentric climate governance systems. See Boasson (2018).

Additional information

Notes on contributors

Shaikh Eskander

Shaikh Eskander is currently a Senior Lecturer in Economics at Kingston University London and a Visiting Fellow at Grantham Research Institute on Climate Change and Environment at London School of Economics and Political Science. An applied economist by training, Shaikh has specialized in the empirical analysis of climate economics and policies and climate-resilient sustainable development.

Catherine Higham

Catherine Higham is a Policy Fellow at the Grantham Research Institute on Climate Change and Environment at London School of Economics and Political Science. Her work is focused on understanding developments in climate change law and the impacts of legal interventions on climate governance systems.

Maggie Hamley

Maggie Hamley is currently working as a Sustainability Consultant. She completed a MSc in Environmental Economics at LSE in 2022 with a focus on empirical climate analysis and macro-economic policies.

Joana Setzer

Joana Setzer is an Assistant Professorial Research Fellow at the Grantham Research Institute on Climate Change and the Environment, at the London School of Economics and Political Science. Her main areas of expertise are climate litigation and global environmental governance.

Samuel Fankhauser

Sam Fankhauser is Professor of Climate Economics and Policy at the Smith School of Enterprise and the Environment, University of Oxford. He is also Research Director of Oxford Net Zero.