Filling the climate governance gap: Do corporate decarbonization initiatives matter as much as state and local government policy?

Abstract

Companies and subnational governments are actively attempting to fill the greenhouse gas (GHG) mitigation gap left by weak national policy, but how effective are their efforts in reducing GHG emissions? This is the first study to disaggregate corporate GHG reporting from CDP (formerly Carbon Disclosure Project), down to the facility level to analyze the respective roles of corporate initiatives and subnational public policies in driving corporate decarbonization in the United States from 2010 to 2019. We find that although corporate decarbonization initiatives are associated with GHG reductions, the primary drivers of corporate facility decarbonization are state-level climate policies, in particular financial incentives for energy efficiency. Given that the same types of incentives are significantly expanded under the 2022 Inflation Reduction Act (IRA), our finding suggests that state and local government mobilization of new incentives will play a crucial role in achieving private sector decarbonization goals. Last, total emissions by CDP-disclosing corporations increased substantially over our sample period, meaning that expansion of subnational climate action and corporate initiatives may be vital to reduce overall U.S. corporate emissions.