As countries meet at COP29 in Baku, a new Oxford University study, developed through pro-bono partnerships with 48 leading law firms around the world, purports to provide “the most detailed view yet of how key economic rules are aligning – or not – to climate goals”.
While the incoming Trump Administration will likely reverse climate rules in the US, the global spread of mandatory rules on net zero – with new rules in 21 jurisdictions ranging from Europe, to China, to South Africa coming into effect from 2023 onwards – means companies face global compliance obligations.
For example, a new law in the EU requires companies to create plans that lay out how they will transition to net zero. In Brazil, incoming rules require listed companies and financial institutions to report publicly not only their emissions, but also the risks they face from climate change. Similar rules exist in California, China, and Turkey. And in the UK, companies seeking to sell the government goods and services worth more than £5m must have a net zero plan.
The study comes at a critical moment as the world confronts a persistent “implementation gap†between climate targets and results. While countries, companies, and other actors continue to set net zero targets – including a 23 percent rise in company net zero targets over the last year – global emissions also continue to rise. As countries look to submit new pledges under the Paris Agreement next year, it is vital they underpin top-level targets with concrete regulations and policies to ensure implementation.
At the same time, a second Trump Administration has promised to roll back climate policies in the US, meaning companies may face a fragmented regulatory landscape, and that policies and regulations introduced at state level and by the rest of the world are all the more vital for achieving net zero globally.
“Nations and companies have made ambitious pledges, but pledges alone wonâ€t prevent catastrophic climate changeâ€, says co-lead for the new survey Professor Thomas Hale of Oxfordâ€s Blavatnik School of Government. “We need legally enforced rules – imposed by governments on themselves and on companies operating in their jurisdictions. The good news is thereâ€s been huge recent growth in such rules. Next we need to close gaps.â€
“To close gaps in climate policy, we need to be able to see and understand themâ€, says co-lead Dr Thom Wetzer, Associate Professor at Oxfordâ€s Faculty of Law and Oxfordâ€s Smith School. “Our open-access Climate Policy Monitor will allow everyone to evaluate the ambition, comprehensiveness and stringency of climate regulations as they evolve over time.â€
The Climate Policy Monitor, launching Wednesday 13 November from the University of Oxford, will be a regularly updated public resource evaluating the ambition, comprehensiveness, and stringency of climate-related regulations against 250+ data points. It evaluates national regulations in three key domains:
Climate-related disclosure: Obligations on companies and financial institutions to publicly report information on the risks presented by climate change, their contributions to the problem, and/or the policies they have in place
Transition planning: Rules that require companies to lay out steps they will take to align with climate goals
Public procurement: Rules that align government spending – which typically accounts for 10–15% of a countryâ€s GDP and includes everything from vehicles to new hospitals – with governments†climate goals.
At COP29, the Monitorâ€s findings support the work of the UN Taskforce on Net Zero Policy (launched last year at COP28), which will issue a major report in Baku to advance efforts to align policy tools to climate goals. Catherine McKenna, former Canadian Environment Minister and head of the UN Secretary-Generalâ€s net zero integrity task force, says: “Voluntary efforts are important but only get us so far. By weaving net zero into the rules that shape the economy, policymakers can level the playing field and drive not just pledges but big cuts in emissions.â€
The Climate Policy Monitor finds growing regulatory activity across the major economies, but also continuing gaps.
- In disclosure, 17 jurisdictions mandate companies to disclose emissions across their entire value chains (so called ‘Scope 3′ emissions). As well, 17 jurisdictions – including China, Japan, Turkey, Australia, and the US – regulate companies†global footprints, imposing regulatory requirements on suppliers around the world.
- Rules that require companies to lay out their transition planning (the steps they will take to meet their climate pledges) are increasingly being used to counteract ‘greenwashing†(making pledges without saying how they will be achieved). However, many of these rules remain soft. Only 20% of regulations require companies to actually implement their plans.
- While there has been a big uptick in requirements to align government procurement spending with climate goals – with new rules coming into play since 2023 now covering a collective procurement spend across 17 jurisdictions of USD $9.7 trillion – a lack of clear standards on how to operationalise these requirements means the effectiveness of these rules remains in question.
The Monitorâ€s rich data, open-access at climatepolicymonitor.ox.ac.uk, show specific areas where regulators can strengthen and align economic rules to create a level playing field and enabling environment for achieving net zero. The Monitor will be expanded to further domains and jurisdictions next year.
Helena Viñes Fiestas, Commissioner of the Spanish Financial Markets Authority and co-chair of the UN Taskforce on Net Zero Policy, said: “The urgent need for a meaningful and systemic response to climate change has never been more evident. Clear and ambitious net zero rules are essential to unlock the investments required for the transition and help regulators reduce risk. While early progress is encouraging, it is insufficient to limit global warming to 1.5 degrees. We must act decisively and swiftly to capitalise on economic opportunities, mitigate risks, and drive the world toward a net zero future.â€
Professor Thomas Hale of Oxford Universityâ€s Blavatnik School of Government, co-lead for the Monitor, said: “Thereâ€s been huge growth in rules around net zero in just the last year, not just in Europe but in jurisdictions like South Africa, Turkey, and California. While the incoming Trump administration may try to roll back federal policies, firms operating around the world will be looking at their growing global regulatory obligations.â€
Dr Thom Wetzer, Associate Professor of Law and Finance and Director of the University of Oxfordâ€s Sustainable Law Programme, co-lead for the Monitor, said: “Net zero targets are becoming embedded in the global economic architecture. Following a groundswell of voluntary net-zero targets by companies, regulators are increasingly introducing mandatory rules underpinned by widely endorsed standards. Globally operating businesses will have to navigate that reality, even as the Trump administration may attempt to reverse US climate policy.â€
Amanda Carpenter, Director of The Legal Charter 1.5, said: “The Monitor data is of great consequence to the legal sector. Lawyers both hold a crucial position of influence with clients and will also be present in key decision-making and legislative processes that shape the transition to net zero. We are delighted that the One Million Hours initiative could facilitate the pro bono work to support the Climate Policy Monitor.”
