Tackling climate change, addressing other environmental threats, and achieving the green transition all require the profound transformation of network sectors such as water, energy, e-communications, and transport. As leading public bodies in the governance of network sectors, economic regulators can significantly affect environmental outcomes. This publication discusses the role of economic regulators and the tools they can use to contribute to environmental sustainability and the green transition in the sectors they oversee.

There is large variation in the degree and scope of regulators’ contributions to the green transition and environmental sustainability. This variation is driven by differing institutional frameworks, which determine regulators’ objectives and functions, as well as their powers to consider environmental sustainability in decision making and execution of regulatory functions. These overarching arrangements shape the internal governance of regulators and choices made around tools, processes, capacity, and resourcing.

There is currently no standard approach to the role of economic regulators in environmental sustainability:

• While close to half of regulators report having objectives relating to environmental sustainability set in legislation, one-third of regulators surveyed do not. An additional share are required to adhere to overarching environmental objectives for public institutions.
• Many regulators report that objectives can be vaguely defined and the regulator’s own interpretation and concern for acting beyond remit may limit potential action beyond information gathering and knowledge building, based on publicly available or voluntarily provided data.
• Regardless of whether regulators have defined objectives, a significant proportion (42%) lack the legal power to consider environmental sustainability in decision making. Moreover, 10% lack the relevant legal powers, despite having objectives defined. These findings suggest a mismatch between mandates and relevant legal powers for some regulators.