Communicating about Climate Change with Corporate Leaders and Stakeholders
- Andrew J. HoffmanAndrew J. HoffmanStephen M. Ross School of Business, University of Michigan
Within the corporate sector, climate change represents an unfolding market shift, one that is driven by policy but also by pressures from a variety of market constituents such as consumers, suppliers, buyers, insurance companies, banks, and others. The shift takes place in both mitigation of greenhouse gas emissions and adaptation to the physical effects of a changing climate. It is manifest in shifts in market demand, cost of capital, operational efficiency, energy efficiency, access to raw materials within supply chains, and other issues of business concern. In fact, when viewed in this way, business leaders and stakeholders can be agnostic about the science of climate change and still see it as a business issue. In the face of a market shift, successful companies must innovate. And as in any market shift, the implications of addressing climate change are not uniform; the burden will not fall evenly. There are both risks and opportunities; there will be both winners and losers. Certain companies, industries, and sectors will be impacted more than others. This article will discuss the ways in which climate change poses market risk and the strategic responses that companies might adopt to respond to and mitigate that risk. This focus is critically important as the solutions to climate change must come from the market. The market is the most powerful institution on earth, and business is the most powerful entity within it. The market compels business to make the goods and services we rely upon: the clothes we wear, the food we eat, the forms of mobility we use, and the buildings we live and work in. If the market does not lead the way toward solutions for a carbon-neutral world, there will be no solutions.