While firms operate in a defined regulatory environment, they can also influence policies. This relationship is especially relevant in the context of climate policy. Therefore, we set out to investigate how institutional regimes influence firms’ corporate climate action (CCA) and how firms position themselves regarding major climate policies. Based on a multiple case study of German automotive incumbents, we develop a conceptual model to outline the interrelationships between climate policies, CCA, and firms’ positions regarding climate policies leading to four main findings. First, past CCA does not allow to predict future CCA. Second, firms tend to set CCA targets late and with long target time horizons when they perceive great uncertainty about the future. Third, the more established an institution, the more likely CCA adheres to the institutional regime. Finally, firms’ political response to climate policy is determined by characteristics of the policy and its compatibility with the focal firm’s CCA. Our study contributes to research on decarbonization of firms by providing a more integrated understanding of firms’ climate action and its links to climate policy. Furthermore, we emphasize the role of different time horizons for the interplay between CCA and corporate political activity.
