Climate change is not a future worry, but a present threat, and companies must assess their vulnerabilities and develop strategies to mitigate risk. That’s the assessment of Cal State Fullerton Assistant Professor of Management Chethan Srikant and Associate Professor of Management Atul Teckchandani.
In their article published in the Journal of Business Strategy, entitled “Climate Change and Business Planning: Solutions to Keep Disruptions at Bay,” Srikant and Teckchandani argue that the traditional competitive advantage framework used by businesses must be updated to include climate change resilience, in light of such concerns as California wildfires and drought and more frequent and stronger hurricanes.
“The resource-based view of business strategy has said that an organization’s resources have to be valuable, rare, not easy to imitate and organized to exploit in order to create a sustained competitive advantage,” Srikant explains. “Now, it is absolutely necessary to consider a fifth dimension: the climate change resilience of the resource.”
While clear examples include oil production in the Gulf of Mexico, which is acutely at risk from hurricanes, Srikant and Teckchandani are more concerned with less-obvious but no less serious impacts on companies and workers.
For instance, during extreme heat waves in the Desert Southwest, certain types of airplanes are grounded because they cannot withstand extreme temperatures. Or breweries have made adjustments because beer must be exposed to certain air temperatures to become infused with wild yeasts, and changing temperature patterns have shortened brewing seasons, impacting workers and company bottom lines.
Srikant and Teckchandani encourage businesses to recognize that climate change is broader than extreme weather events, and instead, understand the persistent changes over multiple years. The manifestations aren’t only found in warmer temperatures or wildfires, but in all manner of extreme or unusual conditions.
“Remember the snowstorm earlier this year that brought down the electrical grid in Texas? The grid can’t be moved, so it needs to be redesigned or reinforced to be able to weather the next big storm, whether that occurs in winter or summer,” says Srikant.
Read more in this CSUF News article.