Rethinking complementarity: The co-evolution of public and private governance in corporate climate disclosure

In its 20 years of operation, the Carbon Disclosure Project (CDP) has been enormously successful as a private governor of corporate climate risk disclosure. Despite an influx of potentially competitive government-led disclosure initiatives and interventions, the use of CDP's platform has nonetheless accelerated. To explain this outcome, we argue that public interventions augment the value of private governance for firms when the costs of compliance overlap, benefits of compliance with private rules are undiminished, and normalization helps kickstart positive feedback effects. These conditions of complementarity are made possible by private governors leveraging authority, access, and adaptability as public responses materialize. We illustrate our argument with two cases: the Non-Financial Reporting Directive in the European Union and the G20's Task Force for Climate-Related Financial Disclosures. In elaborating the conditions for complementarity beyond a functional division of governing labor, our study helps clarify how public and private governance co-evolve in a mutually reinforcing manner.