Harnessing business support for ambitious climate policies
How to engage businesses to co-create ambitious regulation and send strong market signals
What you can learn from this page
This webpage outlines how clear policy signals create predictable market conditions that give businesses the confidence to invest in sustainability, illustrated by city commitments like C40’s Accelerators and Oslo’s zero-emission construction procurement. The page details actionable strategies for cities to gain business support, including creating structured alliance platforms, conducting intentional policy consultations, and using regulatory sandboxes like Madrid’s to test low-carbon innovations. Additionally, it provides guidance for businesses on supporting these climate goals through responsible policy engagement, clear demand signals, and transparent target-setting.
Clear, consistent and robust policy signals are good for business
One of the key things cities hear time and time again from businesses is the need to have clear policy signals and regulation to create predictability and a level-playing field. When businesses are clear about the regulatory environment they are operating in, and have confidence that these policies will remain in place, they are able to invest and make decisions accordingly. If a city commits to prioritising sustainability and climate policies, it makes it easier for the businesses based in that city, and elsewhere, to act.
This relationship was coined as the Ambition Loop – a positive feedback loop in which bold government policies and private sector leadership reinforce each other, and together, amplify climate action.
Many cities are implementing ambitious climate action plans, and making public commitments alongside these plans. For example, according to the 2024 Global Covenant of Mayors (GCoM) Impact Report, based on current targets and actions, GCoM cities and local governments could collectively reduce global emissions by 4.2 GtCO2 annually by 2050 compared to a business-as-usual trajectory.
The C40 Accelerators are another excellent example of clear, public, political commitments from Mayors that send a strong signal to the business community, such as:
- Clean Construction Accelerator: Cities commit to requiring zero-emission construction sites by 2030, and reducing embodied emissions by at least 50% for all new buildings, major retrofits, and infrastructure projects by 2030.
- Net Zero Carbon Buildings Accelerator: Enact regulations and/or planning policy to ensure new buildings operate at net zero carbon by 2030.
- Green and Healthy Streets Accelerator: Procure only zero-emission buses from 2025.
C40 and GCoM’s research on green technology markets has shown that within the same countries, markets for green technologies tend to be local. Ambitious cities that leverage existing policy frameworks to create an enabling environment for business investment serve as the primary market drivers.
Through working with businesses in the structures set out in the previous pages (link to convening page), cities can accelerate an ambition loop by working with businesses to increase policy ambition and go further, faster.
Steps to action this
Click the tabs below to read the recommended steps for cities and businesses to develop effective regulatory environments
Cities / local governments
For cities to secure business support for passing ambitious climate policies, some of the key strategies to invoke include:
- Build a City-Business Climate Alliance platform: Having a structured space for engaging businesses enables open discussion on upcoming policy and policy barriers, using this relationship to drive forward effective new regulation.
- Oslo Zero-Emission Construction: By setting a clear target to use electric or zero-emission technology across all municipal construction sites by 2025, the City of Oslo used public procurement to send a long-term signal to the market. Engaging businesses early and having predictable municipal processes allowed the city to be bold in its demands, resulting in a rapid market response and the creation of the world’s first fully electrified, zero-emission construction sites. The city used their Business for Climate Leaders group to feed in throughout this policy shift, incorporating their feedback.
- Curate intentional policy consultations: Rather than approaching business consultation as a tick-box exercise, cities should ensure that businesses are part of the journey of developing new policy standards. Consulting businesses on what is needed to make new policies successful early in the process can result in more effective implementation, and create stronger relationships between the city and its industry partners.
- Implement regulatory sandboxes: Where the city has a strong business community who are exploring new innovations and climate solutions, but the city has not yet been able to change existing regulations to enable mass uptake of this, implementing regulatory sandboxes can be an effective way to test and prove the need for policy changes.
- Madrid Regulatory Sandbox: Madrid passed a regulatory sandbox ordinance to create a controlled testing environment (both physical and virtual) in the public space. As part of its roadmap to climate neutrality, this sandbox allows the city and businesses to test low-carbon urban models and sustainable mobility innovations, identifying policy barriers to decarbonization before rolling out wider municipal regulations across the city.
For Businesses
Businesses that want to support climate ambition can match these efforts through their own actions. These could include:
- Responsible policy engagement and lobbying: Actively engaging in consultations and alliance platforms the city is running ensures your needs and voices are heard. A simple review of whether the city in which you operate has aligned policy goals to your transition plans can identify areas in which you could lend your voice to support these. Ensuring your local business units are not actively lobbying against policies that support a broader plan is critical.
- Demand signals: Clearly communicating and committing to specific targets, from building materials to plant-based food, can ensure governments and the broader supply chain have clear demand signals to support their shifts. Forming alliances with other businesses to aggregate demand can also demonstrate this.
- Commit to bold targets: Maintaining your climate goals and transparently reporting on your progress demonstrates corporate leadership, builds trust with city regulators, and ultimately encourages governments to pass the supportive policies needed to scale green innovations.
Next Topic: Fostering climate innovation ecosystems and cleantech sector development