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.