Marc Wouters

2026

Decentralized organizations that are exempt from carbon regulations face the challenge of incorporating carbon considerations within decentralized decision making. While internal carbon mechanisms such as internal carbon pricing, target setting and reporting exist, empirical evidence suggests that their adoption does not reliably lead to meaningful emission reductions, largely because they are treated as isolated tools rather than components of an integrated management control system. This thesis addresses this gap by developing a conceptual framework for internal carbon regulation in decentralized organizations by analyzing the regulatory logic of empirically effective climate change mitigation policy instruments as defined by the OECD. The analysis results in six regulatory functions: goal orientation, information generation and transparency, cost internalization, constraint setting, process shaping, and flexibility. These functions are operationalized through internal mechanisms and assembled into a coherent framework. The resulting framework offers an internal carbon regulation design logic that aligns decentralized decision making with organization-wide carbon goals. This thesis contributes a theoretical framework foundation grounded in empirically effective climate change mitigation policy instruments and a practical tool for top management to design internal carbon regulation.