Value maintenance or value creation. Firms' response to the CO₂-Performance Ladder

Abstract

Firms need to implement major changes to reduce their CO₂ footprint. One method to incentivise them, is with the CO₂-Performance Ladder. The CO₂-Performance Ladder is a voluntary instrument indirectly empowered by financial benefits in tenders. To get a certificate on the CO₂-Performance Ladder, firms need to comply with requirements, of which requirements 4D and 5D demand companies to take initiative in reducing CO₂ emissions in their sector. The SKAO has little insight in how firms respond to these requirements, and what kind of initiatives are taken. However, the SKAO does suspect that some firms comply with minimal effort, and that some firms go beyond requirements. Furthermore, in literature little is known about how firms respond to unique policy such as the CO2PL. To provide insight in this knowledge gap, we pose the following research question: how do firms respond to meet the requirements 4D and 5D of the CO₂-Performance Ladder in the Netherlands? To research this, we used and extended the framework of Wesseling et al. (2015) on firm response to public innovation policy. Furthermore, sixteen semi structured interviews were conducted and we were able to categorize all companies in the framework. However, we had to extend the framework to fully comprehend all empirical findings. We argue that firms use a combination of compliance and influence strategies, in which we discern between value maintaining or value creating activities. From the comparative case study, we found that in line with theory most firms use either a combination of value maintaining strategies; non-innovation combined with defensive influence strategies and start an initiative for legislation or relabel a client order, or use a combination of value creating strategies; incremental or radical innovation strategies combined with a proactive influence strategy and are intrinsically motivated or start an initiative for the business model. However, we found some firms do not follow what theory suggest. From the findings, we suggest that other policymakers take lessons from the CO2PL. Especially the wide interpretation of CO₂ reducing innovations seems to be a fruitful concept of the CO2PL.