Private Companies: The Missing Link on The Path to Net Zero

69 Pages Posted: 24 Mar 2022 Last revised: 6 Apr 2023

See all articles by Alperen Gözlügöl

Alperen Gözlügöl

London School of Economics - Law School

Wolf-Georg Ringe

University of Hamburg - Institute of Law & Economics; University of Oxford - Faculty of Law; Stanford University; European Corporate Governance Institute (ECGI)

Date Written: March 22, 2022


A global consensus is growing on the contribution that corporations and finance must make towards the net-zero transition in line with the Paris Agreement goals. However, most efforts in legislative instruments as well as shareholder or stakeholder initiatives, have ultimately focused on public companies.
This article argues that such a focus falls short of providing a comprehensive approach to the problem of climate change. In doing so, it examines the contribution of private companies to climate change, the relevance of climate risks for them, and the phenomenon of brown-spinning (i.e., the practice of public companies selling their highly polluting assets to private companies). We show that one cannot afford to ignore private companies in the net-zero transition and climate change adaptation. Yet, private companies lack several disciplining mechanisms available to public companies, such as institutional investor engagement, certain corporate governance arrangements, and transparency through regular disclosure obligations. At this stage, only some generic regulatory instruments, such as carbon pricing and environmental regulation, apply to them. In addition, private companies might be subject to a certain discipline via their financiers, namely banks.
The article closes with a discussion of the main policy implications. Primarily, we discuss and evaluate the recent push to extend climate-related disclosure requirements to private companies. These disclosures would not only help investors by addressing information asymmetry but also serve a wide group of stakeholders and thus aim at promoting a transition to a greener economy.

Keywords: private companies, net-zero transition, climate-related disclosures, brown-spinning, climate change, private equity

JEL Classification: G38, K22

Suggested Citation

Gözlügöl, Alperen Afşin and Ringe, Wolf-Georg, Private Companies: The Missing Link on The Path to Net Zero (March 22, 2022). forthcoming in the Journal of Corporate Law Studies (2023), European Corporate Governance Institute - Law Working Paper No. 635/2022, SAFE Working Paper No. 342, LawFin Working Paper No. 38, Available at SSRN: or

Alperen Afşin Gözlügöl

London School of Economics - Law School ( email )

Houghton Street
London WC2A 2AE, WC2A 2AE
United Kingdom

Wolf-Georg Ringe (Contact Author)

University of Hamburg - Institute of Law & Economics ( email )

Johnsallee 35
Hamburg, 20148
+49 40 42838 7787 (Phone)
+49 40 42838 6794 (Fax)


University of Oxford - Faculty of Law

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Oxford, OX1 3UL
United Kingdom


Stanford University ( email )

Stanford Law School
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Stanford, CA 94305
United States


European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels


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