27 November 2018: Actions that companies take to combat climate change can spur governments to enact stronger policies to help businesses achieve their climate goals, according to a report published by the UN Global Compact, the World Resources Institute (WRI) and We Mean Business.

The report titled, ‘The Ambition Loop: How Business and Government Can Advance Policies that Fast Track Zero-carbon Economic Growth,’ shows that ambitious targets and legislation set by governments to reduce greenhouse gas (GHG) emissions provides companies with greater clarity and confidence to invest in climate solutions. This positive feedback loop, or “ambition loop,” in which government policies and private sector leadership reinforce each other, helps both governments and companies accelerate action and make further progress towards achieving the objectives of the Paris Agreement on climate change and the SDGs.

The report explains that corporations are already contributing to ambition loops by pursuing science-based emissions reduction targets, committing to 100% renewable energy, increasing energy efficiency, committing to end deforestation and transitioning to zero-carbon vehicles. In addition, the report notes, almost all countries have forwarded initial nationally determined contributions (NDCs), which must be further strengthened by 2020, thereby providing positive signals to companies.

Government policies that add clarity and build confidence provide incentives for companies to transition towards a zero-carbon future.

According to the report, government policies that “add clarity and build confidence” drive private sector action and provide incentives for companies to transition to a zero-carbon economy. The report showcases examples of the ways in which public and private sector goals have aligned to create ambition loops in China and India where strong national policies regarding increasing electric vehicle sales and solar electricity generation, respectively, built on business leadership, unlocking investments and leading to climate action.

At the same time, the report provides examples of the ways in which business actions have motivated governments to deliver more ambitious policies, with, for example, more than 70 European companies joining the RE100 initiative and committing to power their businesses with 100% renewable electricity. Some of these same businesses called for the EU to increase its 2030 renewable energy target, following which, in mid-2018, the EU increased its renewables target from 27% to 32% and required its member States to remove barriers to power purchase agreements.

The release of the report comes ahead of the UN Climate Change Conference, which is meeting from 2-14 December in Katowice, Poland. The conference is expected to adopt implementation guidelines for the Paris Agreement. [Publication: The Ambition Loop: How Business and Government Can Advance Policies that Fast Track Zero-carbon Economic Growth] [Report Website] [We Mean Business Press Release] [WRI Report Page] [SDG Knowledge Hub Story on Companies Committing to Science-Based Climate Targets, RE100 Progress Report]