Corporate strategy and climate change: a nonmarket approach to environmental advantage

It is not only necessary to integrate environmental sustainability with management and organizational principles, but such practices must also be elevated from an operational to a strategic level. In this chapter, we examine how companies can embed environmental concerns and sustainability initiatives in the design and delivery of strategy. This can result in the development of environmental capabilities that underpin corporate competitiveness. In focusing on a strategic management approach to sustainability, we align the market and nonmarket context to advance a holistic, capabilities-based approach to corporate strategy for climate change. We consider the business opportunities and market initiatives, as well as the strategic regulatory engagement and lobbying of firms. Our point of departure is the distinction between firms that are proactive - going beyond what is legally required and often developing new capabilities as a result - and firms that are more reactive, frequently approaching environmental issues through the lens of compliance and cost. Proactive engagement typically suggests a longer-term strategic perspective, with the intent to develop new products, innovate processes, and explore new market opportunities - all of which take time. A reactive mode can indicate a short-term and tactical approach to engaging with climate change.