Firm-level Strategies for Climate Change Adaptation: Sectoral and Geographic Influences

We apply the natural resource-based view (RBV) of the firm to a 17-year longitudinal data set of 117 FT500 companies to understand the influence geography and sector have on firms integrating a climate change focus into their business model. We base our analysis on information derived from the Carbon Disclosure Project (CDP). Our RBV-model captures a two-stage transformation process, which includes Walk I and Walk II. This process identifies the firm’s changes in governance, information gathering, and managerial systems as an ‘intermediate’ step, i.e., Walk I. This step often precedes firms actually investing in changing products and production processes to complete the transition towards a more proactive state, i.e., Walk II. We find that firms with a head office in Europe have initiated investments earlier along Walk I than firms with a head office in North America and this extends to Walk II as well. However, by the end of the period included in our data set, there appears to be little difference anymore in the degree to which a climate change focus has been integrated into firm-level strategy along Walk I and Walk II. The sectoral affiliation also influences firm-level strategy and the speed and depth with which a climate change focus materializes over time. For instance, energy-related firms have integrated a climate change focus earlier than firms in business-to-consumer (B2C) sectors and have made deeper changes to their business models in terms of dedicated investments. Firms in B2C sectors have also added a climate change focus, but the changes they have made typically did not require the same depth of dedicated investments. Firms not included in either of the two above groups have somewhat lagged in the start of transition and occupy an intermediate position as to the level of change required for a Walk II transformation. Keywords Resource-Based View, Dynamic capabilities, Carbon Disclosure Project, Dynamic GISTe model, Data driven climate change strategies, FT500 longitudinal data base, Walk I and Walk II model, GISTe model, geographic and sectoral influences