Responses to the recent MIT Sloan Management Review and BCG annual sustainability survey suggest that the risks of climate change are not a top concern in the business world. But new attention from business leaders could be building momentum for change.

Respondents to the recent MIT Sloan Management Review and BCG annual sustainability survey ranked climate change fairly low on their list of sustainability issues. Although 67% agreed climate change is real, only 11% ranked it as a very significant issue.

Those survey responses, from close to 2,000 managers in a wide range of industries, suggest that the risks of climate change are not a top concern in the business world. But a recent front-page New York Times article suggests otherwise.

Perceptions of climate change

View Exhibit

Managers believe climate change is real, but their companies aren’t prepared.

According to “Industry Awakens to Threat of Climate Change,” there is a “growing view among American business leaders and mainstream economists” that climate change represents a substantial threat to supply chains, commodity costs and the global economy.

The article quotes leading academics and economists, and references two companies well known on the sustainability circuit — Nike and Coke — that are facing problems linked to climate change. Both organizations have well-publicized and oft-cited efforts to operate more sustainably; Nike in particular is an exemplar in the business world.

The attention of two companies and the corporate, political and cultural elite in Davos — who spent a day of the annual World Economic Forum devoted to “the threat of climate change” — may not a trend make. After all, our data shows that while there is a small subset of companies that clearly recognize the threat, most have yet to fully wake up to the risks climate change can pose to their businesses. Even for the 27% of our survey respondents who agreed strongly that climate change is a risk to their business, only 9% believed that their companies are prepared for those risks.

But regardless of how many companies engaging in climate change issues constitutes an awakening, the call to action is definitely getting louder, and it’s getting closer to home for businesses.

Several forthcoming reports commissioned (and written) by political heavyweights will add more credibility to the claim. One, entitled “Risky Business,” will look at the impacts of climate change with the impetus that, as former U.S. Treasury Secretary and report consultant Robert Rubin puts it, “business leaders are not adequately focused on the economic impact of climate change.” The Risky Business product is a joint initiative of Bloomberg Philanthropies, the office of former U.S. Secretary of the Treasury Hank Paulson and the research and educational group Next Generation.

Business observers have a natural inclination to say that market mechanisms are the only way to get industry to respond to climate issues, but it may be that peer pressure has a role, too. If being a leader in sustainability is something a competitor is getting mileage from, that may become reason enough for another company to get moving on climate issues.

Being a fast follower on climate change, on the other hand, may be more complex and require longer lead times than most companies are anticipating. Preparing for the effect of droughts on critical commodities, for example, is not something that can be done with a quick fix.

Bottom line: the more quickly industry does awaken to the threats of climate change, the better chance companies will have to prepare.

4 Comments On: Who Says Industry is Awakening to Climate Change Threats?

  • Michael Serra | February 14, 2014

    By climate change are you referring to the natural ageing of the planet where unavoidable events like the ice age occur? Or the man made panic? 2 very different issues. One there is very little we can do to stop or change or even predict.
    The other is simply some bs marketing to make the alarmist think they are doing something.

  • Colin Miller | February 14, 2014

    IF YOU HAVE FAITH IN SCIENCE, YOU’RE DOING IT WRONG.

    The cited NYT’s Davos comment “it’s less about polar bears and more about promoting self interest” hits the nail on the head and finally chalks one up for moral intent.

    If there’s a water shortage and that’s 90% of your product, then by all means it’s in the producers interest to get that commodity subsidized by Government intervention.

    Perhaps too we can have the discussion about the self-interest of “Climate Scientists” and how they might be working to promote confirmation bias?

    A final thought before the inevitable wave of “denounce and pounce” comments this sort of contrarian thinking is known to produce.

    “To insist that only your ideology is empirical and enlightened is to conclusively prove that it is neither”. Andrew Quinn – Federalist -The Party of Science.

  • Joyce Coffee | February 17, 2014

    Your article suggests a climate adaptation gap that is ripe for advisory firms to fill.
    Based on the WEF numbers, if corporations see a risk, but, based on the MIT numbers, they do nothing about it, that gap suggests that businesses are not yet sure how to manage the risk that changed climate brings to their value chains.
    Since climate adaptation relates to the direct impacts on our most important assets – our employees, our customers our communities and our families, those who advise corporations possess a great opportunity to demonstrate to their clients the significant collateral benefits of a five step plan of adaptation action – see here
    http://climateadaptationexchange.com/the-climate-adaptation-gap/

  • habeebra | February 26, 2014

    Climate finance, should be promoted in a big way, which while considering all financing decision, should take into account the impact it is going to create on environment. Every financing should be directed towards such industries, which protect the environment. It is high time for industry leaders to realise that, if they do not take care of environment, their customers will perish sooner than later and the so called industry leaders themselves will come to know that the huge growth in top line and bottom line which they have achieved do not add any value even for them.
    Dr.P.A.Habeeb Rahiman

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