Private Companies: The Missing Link on the Path to Net Zero

When: 10 Jan 2022, 14:15-15:30
Where: Zoom
Speaker: Alperen A. Gözlügöl

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Meeting ID: 972 3304 9993


There is an increasing attention on the part of policymakers, investors, and other stakeholders to accelerate the net zero transition in companies in line with the Paris Agreement goals as well as building their resilience against climate risks. However, whether it is legislative pieces, shareholder or stakeholder efforts, the focus is ultimately on public companies. This article questions whether this approach is warranted. In doing so, it examines the contribution of private companies to climate change, the relevance of climate risks for them as well as the phenomenon of brown-spinning. The examination reveals that one cannot afford to ignore private companies in the net zero transition and climate change adaptation. Yet, private companies lack several disciplining mechanisms available to public companies such as institutional investors’ engagement, certain corporate governance arrangements and transparency. Obviously, private companies are not unconstrained in terms of sustainability and adaptation to climate change. Carbon pricing and environmental duties and litigation are direct constraints. Banks as primary financiers can also play an important role. The article closes with a discussion of main policy implications. Primarily, we propose extending sustainability disclosure requirements to private companies.