How Climate Change Affects Business Strategy
I am curious as to how businesses are preparing for climate change. This article by HBS is a very introductory guide to how businesses can fight back against climate change and “do what’s right.”
From Cote (2024):
"A 2023 survey (pdf) from the Edelman Trust Institute reports that 93 percent of global respondents believe climate change poses a serious and imminent threat to the planet. Yet, only 49 percent trust businesses to “do what’s right” regarding climate change, trailing behind trust ratings for governments and nongovernmental organizations (NGOs)" (Cote, 2024).
"Businesses are some of the largest greenhouse gas producers, making them major contributors to climate change. In 2022, U.S. businesses produced more than six billion metric tons of carbon dioxide equivalent, the metric by which greenhouse gas emissions are commonly measured because it allows different greenhouse gases to aggregate" (Cote, 2024).
"Businesses can generate excess greenhouse gasses by:Burning fossil fuels to generate electricityProducing cement, steel, and iron for constructionWaste management, such as landfills and trash incineratorsTransportation, including cars, trucks, planes, trains, and shipsClearing land for agricultureRaising livestockIndustrial processes like refrigeration and air conditioning" (Cote, 2024).
"Climate change is an externality of these processes" (Cote, 2024).
"According to Business and Climate Change, adaptation refers to the actions companies take to respond to, prepare for, and build resilience against climate change’s physical effects" (Cote, 2024).
"Equally important is mitigation, which refers to companies’ actions to limit climate change, such as by reducing greenhouse gas emissions or removing them from the atmosphere" (Cote, 2024).
“'In the past, there were concerns that any discussion about adaptation would remove focus and urgency from the topic of mitigation,' Toffel says in the course. 'This is no longer the prevailing view. There’s a growing understanding of the importance of both adaptation and mitigation'" (Cote, 2024).
Harvard also recommends businesses to engage in these 4 steps:
- Conduct a life cycle assessment for your product.
- Practice carbon counting
- Innovate and choose more sustainable resources
“'It may be easy for managers to fall into the trap of thinking that one business’s impact isn’t big enough to be worth doing or taking the perspective that it’s someone else’s responsibility to act—the government should take care of it, or consumers need to drive demand,' Reinhardt says in Business and Climate Change. 'But the lesson all business leaders can take from this course is that every firm can have an impact'" (Cote, 2024).
As individuals, it can feel really hopeless to be sustainable in the wake of giant companies that have the power to lobby the government and get away with pollution. It had never occurred to me that small businesses also feel the same why. However, if we all think that because we’re just individuals there is no point in doing anything, then we have fallen in the pitfalls of not doing anything at all. While big businesses are the major contributors to climate change, we consumers and small businesses also have the responsibility to do all that we can. We are all living in this world together so we must hold each other accountable.
No generative artificial intelligence (AI) was used in the writing of this work.
References
Cote, C. (2024, May 28). How climate change affects business strategy. Harvard Business School. https://online.hbs.edu/blog/post/climate-change-and-business-strategy
