Corporate Strategies for Addressing Climate Change
Executive SummaryClimate change is now a bright, blinking issue on the radar screens of companiesworldwide. Companies have started addressing climate change for a myriad ofreasons – reasons as diverse as their respective business models. Theacademic and business literature has done a fairly good job of exploring whycompanies are addressing climate change. This study examines how they areaddressing climate change. It explores the risks, rewards, opportunities andbarriers surrounding corporate action on climate change and provides insight intothe strategies employed by companies that have led the way in taking earlyaction. The lessons learned by early actors can inform the efforts of those whofollow.Climate change presents companies with significant risks, uncertainties, and anincreasing number of market opportunities. Companies now confront a patchworkof regional regulation. In addition, most companies in our survey expect federalregulations to limit GHG emissions within the next decade. The unknowns ofpotential regulation create uncertainty, and therefore risk, for businesses makingstrategic decisions. Volatile energy prices wreak havoc on cost structures,severely impairing the ability to accurately forecast profitability. Large stormevents have caused companies to think differently about the physical risks ofclimate change. Accumulating scientific evidence, coupled with these largestorms, has boosted public awareness, leading to changing consumerpreferences. Companies are looking at these changing preferences andidentifying market opportunities, broadening the traditional risk-mitigationcenteredapproach to climate change.The focus of this study is “climate-related strategies,” defined as the set of goalsand implementation plans within a corporation that either aim to reduce GHGemissions, or that significantly reduce GHG emissions as a co-benefit. Thisincludes strategies and measures for achieving near-term emission reductionsfrom a company’s own operations; research, development, and investment inlow-carbon production and process-related technologies; alternative productsthat have a more attractive carbon profile; energy-efficiency initiatives; reductionsobtained through offsets and emissions trading; and activities to reduce“upstream” or “downstream” GHG emissions along their value chain.