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State-Owned Companies and Climate Change: Part of the problems or part of the solutions?

Venue: Online

Speaker: Prof Gerhard Schnyder (Loughborough University London)



Much debate has taken place about the role of private companies and market mechanisms in tackling climate change and facilitating the transition to a net-zero economy. What this literature neglects, however, is that some of the most polluting firms in terms of CO2 emissions are not privately-owned companies but state-owned enterprises (SOEs). Yet, SOEs react to very different incentives than private sector firms. Consequently, the market instruments for emission reduction are blunted because SOEs are not subject to the same market pressures as private firms. Conversely, bureaucratic control over state-owned enterprises provides the government with more direct channels to achieve behavioral change within firms compared to the effect of market mechanisms on private firms. Investigating the link between SOEs and emissions holds considerable promise in addressing the often-neglected contribution of the state to climate change. We identify several factors related to SOEs’ institutional embedding that influence whether SOEs are part of the problem or part of the solution to climate change mitigation. Our analysis suggests that effective governance and a selective subjection of SOEs to market incentives can be key to making them more sustainable.


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