Policy engagement and advocacy is central to informing and enabling solutions that address the key dependencies of corporate transition plans on government policy and action. Government policy – including direct and indirect public finance, fiscal measures, government-led innovation, sectoral policies, financial regulation, skills/training – all condition what is achievable by corporates.
Given the prevailing gap between the climate commitments made by governments and the policy initiatives that they have proposed and implemented to-date, any company’s transition plan is effectively contingent on clear and consistent policy changes for its strategy to be successful.
Current policies and pledged efforts fall short of aligning with emissions pathways that meet the Paris Agreement’s temperature targets. Even if planned policies are implemented globally, the world is now likely to breach the 1.5°C limit within the next five years, highlighting the urgency of stronger action.1
Deep engagement and collaboration between government and private actors, is therefore central to delivering transition plans – informing public policy and national transition, helping to reduce uncertainty, but through well targeted catalytic interventions, fundamentally “changing the economics” of transition.
Identifying specific policy needs and engaging policy makers is therefore an integral part of designing and this short insight note considers the role of policy in transition planning from the corporate perspective, including guidance on identifying policy priorities and implementing strategic approaches to enabling policy change.
This is the third in a series of insight notes (available here) that focus on key areas of business focus to “unlock” transition plans, building on insight and perspectives shared by WBCSD members.
Role of policy engagement and advocacy
Corporate strategy relies on the policy environment in which it will be executed. Therefore, engaging policymakers is essential not only for advancing individual corporate transition plans but also for fostering the broader policy conditions necessary for successful and widespread transition.2
Building on existing corporate public affairs management and policy engagement processes, companies should seek to engage with policy makers, directly or where appropriately aligned through associations and alliances, to communicate their expectations, and advocate for favourable, transition-focused and climate-positive policy. Companies’ policy positions should be assessed to ensure alignment with the conditions required to support their own transition plan and targets.3 The stability of expected policy – policy certainty – is also important to corporate long-term strategy and planning. This is particularly true where companies’ strategies require locking in significant capital expenditures or other strategic commitments. Companies need to identify these policy contingencies and opportunities, ensure that direct and indirect engagement aligns with their objectives, and advocate for change. The Breakthrough Business Barometer (2025) identified that 96% of business leaders believe governments should stay committed to achieving net-zero emissions but 50% of global companies reported declining confidence in government support.4
Relevance to transition plans
Purposeful and responsible policy engagement, aligned with businesses’ sustainability ambition, can help shape policies that support accelerated action, enhance resilience, and enable strategic and system responses to transition-related risks and opportunities. Positive policy advocacy and engagement5 with governments and regulators can create a supportive policy environment, delivering the right incentives and instilling confidence to accelerate action towards net zero and to wider sustainability goals. Advocacy and engagement can take a number of forms – for example, infrastructure investment; fiscal incentives; de-risking of financing instruments (e.g., blended finance); government-led innovation that helps to unlock and then scale new technology; targeted sectoral policies; facilitative measures, such as disclosure policy, sustainable finance regulation, skills policies. By reducing uncertainty, businesses can increase the likelihood that their transition planning goals and actions are feasible and effective.
Aligning advocacy efforts with transition goals strengthens corporate sustainability strategies and can accelerate the broader systemic transformation required to meet global climate, nature and sustainable development targets.
Transition planning frameworks such as those developed by the Glasgow Financial Alliance for Net Zero (GFANZ) and the Transition Plan Taskforce (TPT) emphasize the role of engagement with value chain counterparts, industry peers, and policymakers. WBCSD is actively exploring the success factors for whole-of-system engagement – how governments, business, finance and civil society can cooperate to trigger policy change or financial flows as part of regional or sector-specific transitions.6 A systemically cooperative approach to the transition on these lines is increasingly seen as critical to achieving transformation at the scale and pace required and to demonstrate alignment with expectations of good policy engagement.7
Primary business motivations for policy engagement are outlined below.
1. Risk Mitigation through Policy Alignment
Companies prepare their businesses for transition-related policy, technological, economic, and social changes. At the same time, they can have influence over those policies, and advocate for policy that minimizes execution risk (e.g. technology development, regulatory requirements, capital certainty, stakeholder alignment) for their transition plans.
Companies may also face risks if their ambitions and respective advocacy is not supportive of the transition. Investors are pushing companies to align their lobbying efforts with their sustainability commitments. For example, Climate Action 100+, a group representing ,over 600 global investors, advocates for responsible policy engagement to meet climate goals. Regulatory requirements, such as the Corporate Sustainability Reporting Directive (CSRD) in the EU, still mandates that companies disclose how their policy engagement aligns with their sustainability targets, although subsequent amendments remain possible.8 Ambitious corporate policy aligned with the transition to net zero therefore also mitigates the risk of misalignment and financial and reputational risk, with investors and other stakeholders. We recognise that the risks of policy misalignment are not only from corporates lagging policy requirements, but also from corporates being too far ahead and exposing them to a change in policy direction.
2. Creating New Business Opportunities
Proactive transition-focused policy engagement can help to steer governments towards policies that create new market opportunities, such as those in renewable energy or sustainable agriculture. By advocating for supportive climate and transition-positive regulations, businesses position themselves to benefit from new growth markets, in line with sustainability goals.
Also, Governments often seek corporate engagement to develop sustainable policies that integrate private-sector strategies, expectations, insights, and innovations. Public-private sector policy cooperation can strengthen the quality and effectiveness of policy objectives and business strategy. McKinsey noted the important role that 50 public-private-philanthropic partnerships were in driving climate and nature transitions.9
3. Driving Systemic Change through Policy
Transition plans, especially those targeting ambitious sustainability and decarbonization goals, can require substantial systemic changes across sectors. Commonly, this can only happen rapidly, and at scale, with clear direction from government, ideally as part of a government’s national transition plan. A well-designed national plan will include policies that translate national ambition to sectoral pathways; that steer sectoral policies and anchor private sector action in both the finance and corporate sectors. The national plan and policies should also create the enabling environment for cross-system and sector change, and targeted incentives and catalytic interventions that encourage businesses to pursue net-zero and nature-positive goals. Note also that a clear national investment plan linked to the national transition plan, can be central to steer private investment in transition.10 Proactive policy engagement and advocacy highlights to government key private sector transition planning needs and challenges – providing opportunity for feedback loops and policy that aligns national and corporate transition plans and strategies.
Ambitious policy advocacy supportive of climate, nature and equity goals can create a positive ‘feedback loop’: bold corporate climate action pushes governments to enact ambitious policies, which in turn embolden businesses to accelerate their own transition plans. Governments seek corporate endorsement for sustainability policies, and this mutual reinforcement accelerates progress toward shared goals.
Transition-focused actions for policy engagement
So, what can members do to enhance their policy engagement? We would highlight three key steps:
1. Identify policy dependencies in your transition plan.
Transition planning is =, inherently a forward-looking and uncertain activity. Plans will necessarily iterate and adapt over time. In gauging a plan’s credibility and feasibility, an important consideration will be the assumptions that underpin it, and the external factors on which it depends. For many businesses, policy dependencies will be among the most important factors to consider in their planning.11 These may include, among others, specific sectoral policies, potential future fiscal measures (e.g., removal of fossil fuel subsidies, expansion of carbon pricing schemes), the degree of government support for new technologies, the rollout of extended producer responsibility (EPR), potential public investment (e.g., in grid decarbonisation or climate adaptation), or the expansion of green skills. Careful consideration of such assumptions and dependencies – an important element of the TPT Disclosure Framework12 – can help a business to identify the critical priorities for policy engagement. Key steps to address transition plan dependencies will be unpacked in detail in an upcoming WBCSD publication ‘A practical guide on transition plan dependencies’ due to be released in late 2025.
By focusing on policy dependencies and actively engaging with policymakers, corporates can:
- Identify the most suitable investments – e.g. renewable energy, low-carbon infrastructure, and innovation.
- Reduce operational and supply chain emissions through regulatory and financial support.
- Build public trust through transparent reporting and advocacy for equitable transition measures.
- Align corporate strategies with national and global climate goals, ensuring long-term resilience and competitiveness.
Examples of key areas of policy dependency and action to enable transition plans, include:
- Defining transition credibility – Collaborating to establish clear criteria and systemic benchmarks for credible corporate transition strategies. Partnering with policymakers and standard setters to define and standardize metrics for transition credibility aligned to country-level actions.13
- Engaging on activity outside your sector and core activities – Understand the external factors that might impact the delivery and attainment of transition planning goals. Organizations should be clear on where transition is dependent on critical innovation of / access to solutions – e.g. future access to and reliance on green energy or carbon capture and storage solutions – and engage governments and wider stakeholders to enable and target strategic development and allocation of critical infrastructure and technology.14 For example, driving appropriate sequencing infrastructure investment and implementation (e.g. grid renewal/expansion).
- Public Policy Advocacy – Advocate for public policies that provide clarity and planning certainty to enable transition ambition, accelerate investment and align private sector action and national commitments and a whole-of-system. Support initiatives for national-level carbon pricing and alignment of national, financial and non-financial sectors transition plans to drive cohesive and integrated transition.15 This may also include, for example, clarity on policy and strategies to implement outright prohibitions, restrictions or phase-out plans for specific “unsustainable” activities – e.g. ICE vehicles.
- Sustainable Finance and Disclosure – Advocate for consistent global taxonomies to avoid fragmented reporting requirements; Collaborate with policymakers and standard-setters to harmonize global reporting frameworks (e.g., on transition metrics and climate disclosures) to prevent fragmented compliance requirements.
- Technology development and innovation – Transition plans can commonly depend on the development and scaling of emerging technologies, such as carbon capture and storage (CCS) or hydrogen energy. Support collaborative and government R&D funding and pilot programs for technologies while advocating for public-private partnerships to accelerate commercialization. Governments also play a crucial role in de-risking and enabling transition solutions (e.g. through blended finance or the activities of public finance institutions) – for example, by scaling innovation and not-yet-viable new technology.
- Informing development of climate and nature transition planning guidance to drive standardization of global practice and norm. For example, engaging with the consultation and piloting phases of the Taskforce on Nature-related Financial Disclosure (TNFD) discussion paper and Glasgow Financial Alliance for Net-Zero (GFANZ) consultation paper for nature transition plans; engaging with the International Transition Planning Network (ITPN) which is focused on driving global norms for transition planning ;and participating in the public feedback on the European Financial Reporting Advisory Group (EFRAG) draft Implementation Guidance on Transition Plan for Climate Change.
- Identifying the top policy levers needed to scale climate actions and align operations with national and international net-zero goals – for example,
- Enabling regulatory certainty to support long-term planning – participate in dialogues to shape transition requirements and funding mechanisms and enable stable regulatory frameworks to guide transition-focused and long-term investments. Engage governments to prioritize investments in climate-resilient infrastructure, including flood defences, renewable energy storage, and climate adaptation technologies.
- Supporting decarbonization across supply chains – By working with policymakers on carbon pricing, subsidies for green technologies, regulations for sustainable supply chains and incentivizing cross-value chain, peer-to-peer and private-public collaboration.
- Building market opportunities – Through partnering with governments to co-develop regulations, incentivization and pilot programs in areas of transition requiring innovation, investment or collaboration.
- Informing consumer behaviours – Advocate for policies that incentivize consumer adoption of low-carbon product and promote sustainable consumption and behaviours.
2. Design a targeted, proactive and positive engagement strategy to maximise influence.
Businesses can then design positive engagement strategies to deliver the maximum contribution to achieving their climate and sustainability goals. Design considerations may include:
- Identify the most suitable investments – e.g. renewable energy, low-carbon infrastructure, and innovation.
- Assess what are the key transition-relevant business objectives and what policy enablement is required.
- What is the value proposition for government? Why should they entertain a policy change?
- Would it be most effective to engage individually or collaboratively with others?
- If a collaborative approach is most appropriate, who else should ‘be at the table’?
- What would be the most appropriate format for the engagement?
- Monitoring engagement outcomes and iterating the approach
- Is policy engagement, advocacy, and lobbying aligned across direct and indirect channels?
- Are company policy priorities well-aligned with its investors or other stakeholders?
- What escalation or other steps could be considered if the strategy does not appear to be working?
3. Aim for policy collaboration
With the prior steps in mind, a collaborative approach to policy development can be a “win-win” for governments and businesses.16 A recent policy report from the Centre for Economic Transition Expertise at the London School of Economics identifies three main focus areas for public-private collaboration – each of which can help to unlock transition planning for businesses and accelerate systemic transformation:
- Collaborating on policy development. Businesses can work together with governments, regulators and others across the system to support the development of new national or sectoral policies that align with shared climate and sustainability goals. If undertaken in a trusted environment, businesses can provide policymakers with access to specialist knowledge and expertise, perhaps at the industry level, accelerating policy development and improving the quality of policy outcomes.
- Identifying and addressing implementation barriers. Businesses know best the barriers they face in developing and implementing ambitious transition plans. Bringing businesses together with government to identify, and then address, such barriers can help to ensure more targeted policy interventions – catalysing more rapid transformation.
- Partnering to scale up solutions. Accelerating climate transition depends on developing, scaling and deploying new technological solutions and other impactful practices and activities. Partnership across government, business and finance – perhaps also with academia – can help to establish critical cross-system connections, target financial and other resources more effectively, and coordinate the sequencing of interdependent actions across the system.
Takeaways
Policy engagement and advocacy are critical to the success of corporate transition plans. They help shape the regulatory environment, foster market conditions conducive to sustainability, and ensure alignment with global climate goals. Companies that engage in climate policy discussions can influence the development of fair and effective regulations, secure access to climate finance, and drive industry-wide change.
By advocating for supportive policies, companies can enhance their long-term resilience, mitigate risks, and strengthen their reputation as leaders in the fight against climate change, biodiversity loss and social inequity. Collaborative policy development can also serve as a win-win for policy makers and business strategy and certainty.
Contact
Corporate Performance & Accountability cp-a@wbcsd.org
Footnotes
- See UN: Climate change: World likely to breach 1.5°C limit in next five years ↩︎
- For example, the Transition Plan Taskforce (now under IFRS) highlights the overlap between corporate action and policymaking in two sections of its disclosure framework. Under its “Implementation Strategy”, a company must articulate the policies and conditions it intends to use or plans to use to achieve its climate-related targets. Under its “Engagement Strategy”, a company must disclose any and all direct and indirect engagement activities with governments and regulatory authorities as part of its plans to achieve its targets. ↩︎
- See the work of the Policy, Advocacy and Member Mobilization (PAMM) team at WBCSD and the blog We Must Usher in a New Era of Public-Private Co-Creation, and Fast (2024). ↩︎
- See WBCSD: Business Breakthrough Barometer 2025 ↩︎
- Defined as a proactive and transparent approach that advocates for policies promoting decarbonization, biodiversity protection, and equitable livelihoods. ↩︎
- See WBCSD: We Must Usher in a New Era of Public-Private Co-Creation, and Fast (2024 ↩︎
- See also Transition Finance Market Review: Scaling Transition Finance: Findings of the Transition Finance Market Review (2024) and We Mean Business Coalition: Mission 2025 ↩︎
- This information is based on the current text of the ESRS. Please note that changes to the CSRD and ESRS proposed under the Omnibus package published on 26 February are currently under development and may result in further revisions. ↩︎
- See The role of public–private–philanthropic partnerships in driving climate and nature transition ↩︎
- See, for example, Taking-lead-climate-action-strategic-national-transition-planning, (CETEx, 2024), Climate Investment Planning and Mobilization Framework (NDC Partnership & Green Climate Fund, 2024), State of Transition in Sovereigns 2024 (Transition Pathway Initiative, 2024) ↩︎
- See A framework for assessing and managing dependencies in corporate transition plans, Rose, Shrimali & Halttunen, (Oxford Sustainable Finance Programme, 2024) for insight on the development of a framework for identifying transition plan dependencies. ↩︎
- ee TPT Disclosure Framework, Disclosure Recommendation 1.3 and considerations in the Engagement Strategy relating to the prioritisation of engagement being informed by where a company needs to exert most influence. ↩︎
- See Credible firm-level transition plans need credible national actions | Smith School of Enterprise and the Environment ↩︎
- See Taking-lead-climate-action-strategic-national-transition-planning, (CETEx, 2024) ↩︎
- See A handbook to strategic national transition planning: supplementary guidance and examples, (CETEx, 2024) ↩︎
- See the final report of the Transition Finance Market Review for perspectives on whole-of-system collaboration. ↩︎
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